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Answer» \tForm of OrganizationFactorMaximum AdvantagesMinimum AdvantagesCapital availablecompanySole proprietorshipCost of formationSole proprietorshipcompanyEase of formationSole proprietorshipcompanyTransfer of ownershipCompany (except Private company)PartnershipManagerial skillscompanySole proprietorshipRegulationsSole proprietorshipcompanyFlexibilitySole proprietorshipcompanyContinuitycompanySole proprietorshipLiabilitycompanySole proprietorship\t\tCost and Ease at Setting up the Organization:\xa0According to the cost of setting up, sole proprietorship is the most inexpensive of all. But, the legal requirements are minimum an the sale of operations are also small. In a partnership firm, the legal requirements and the cost is minimum due to the limited scale of operations. Registrations for co-operative stores and companies are mandatory an the formation of a company is lengthy and expensive as well. Looking at the initial cost factor, sole proprietorship is the most economical. There is more cost involved in the formation of a company.\tLiability:\xa0The liability o owner/partner I unlimited in the case of sole proprietorship and partnership. The owners are liable to pay the debt from their personal assets. In a Joint Hindu undivided family, the Karta has unlimited liability. In the case of companies an o-operative societies, the creditor can limit their debt only to the extent of the assets of the company. From the investors point of view, company form of organization is best suited.\tContinuity:\xa0Death, insolvency or insanity affects the sole proprietorship and partnership. This is not so in the case of a Joint Hindu Undivided family, co-operative societies and companies. For short term project, sole proprietorship or partnership is preferred.\tManagement Ability:\xa0A sole proprietor might not be well versed in all the activities. There is no such problem in forms like partnership or companies. But there is a drawback of conflict or difference in opinion. Complexity of organizational structure also requires professional handling an for this, company form is best. Proprietorship or partnership is recommended when the operations are simple and requires less skills to run the show. Thus, the nature of operations and professional management decides the form of organization to be chosen.\tCapital Consideration:\xa0Companies collect huge amount of capital from investors in the form of shares. The combined resources of all partners is available in partnership, whereas the resource of sole proprietors is limited. Depending upon the scale of operations, company form can be opted and for small or medium sized business, one can choose sole proprietorship or partnership business. In terms of expansion, company form is preferred due to the capacity to raise funds and invest them in the infrastructure.\tDegree of Control:\xa0For direct control over the operations, sole proprietorship may be chosen. When the partners do not mind sharing the decision making, partnership may be the one suitable. In the company form of organization, there is total separation of opening the management because there are specialized personnel to handle the company affairs.\tNature of Business:\xa0For direct contact with customers, sole proprietorship is preferred. In case of large scale operation and the contact with customers is not mandatory, then company form is preferred.
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