Page 110 - Computer - 9(A&B)

 Sole Proprietorship: A sole proprietorship is a business that is owned by a single person. It is among the
easiest kinds of businesses to start because it doesn’t take a lot of paperwork to become a sole proprietor of a
business. The sole proprietorship is not a legal entity. It simply refers to a business person who is personally
responsible for all its debts. It can be operated under the name of its owner or it can do business under a
specifi c name. Small factories and shops are often sole proprietorship businesses. A sole proprietorship
can also be that of a consultant, independent contractor or freelancer. All these are businesses owned by a
single person.

Unlimited Single
Liability Ownership

Less Legal No
Formalities Sole Sharing of Profi t
Proprietorship and Loss

One Man’s
One Man Control
Capital

 Partnership: A partnership is a business that is formed by two or more persons who agree to contribute
money, labour or skill to a business. The partners share the profi ts, losses, and management of the business
and are personally and equally liable for debts of the partnership. Formal terms of the partnership are
usually contained in a written partnership agreement.
Voluntary
Membership
Registration
Unlimited Continuity
Liability
Partnership
Sharing of Contractual
Profi t & loss Relationship

Legal Transfer of
Formalities Interest

 Corporation: A corporation is a business entity that is owned by its shareholder(s) who elect a board of
directors to oversee the organization’s activities. Corporations can be for-profi t as businesses are, or not-
for-profi t, as charitable organizations. A corporation’s shareholders, directors, offi cers, and managers must
observe particular formalities in a corporation’s operation and administration. The corporation businesses
are of two types:
 Private Corporation: A private corporation is a small corporation in which the stock is issued to a
limited number of shareholders. For example, Cargill is the largest privately held company in the
United States.

 Public Corporation: A public corporation is the one that is authorized to sell its stock to the public.
Usually, only companies with substantial revenue and a large number of shareholders can afford the
cost to go public and comply with many regulations imposed on public companies by the security
laws and other government regulations. For example, Reliance is one of the largest public corporation
in India.

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