Forms of Business Organisation

This set covers vocabulary regarding the various forms of business organisation such as Sole Proprietorship and Joint Hindu Family Business, including their features, merits, and legal frameworks.

Sole proprietorship

A form of business organisation which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks.

Sole (Etymology)

A term implying "only", which combined with proprietor (meaning owner) defines a single-owner business.

Unlimited liability

A condition where the owner is personally responsible for payment of debts if the assets of the business are not sufficient, meaning personal possessions like a car or property could be sold to repay the firm's debt.

Sole risk bearer and profit recipient

A feature of sole proprietorship where the individual alone faces the risk of failure and receives all the business profits as a reward for that risk bearing.

No separate entity

A legal concept where the law makes no distinction between the sole trader and his business, making the owner responsible for all activities of the business.

Lack of business continuity

A limitation where the death, insanity, imprisonment, physical ailment, or bankruptcy of a sole proprietor can have a direct effect on the business and cause its closure.

Confidentiality of information

A merit where the sole decision-making authority allows the proprietor to keep business operations secret, as they are not legally bound to publish the firm's accounts.

Limited resources

A limitation where a sole proprietor's capital is restricted to personal savings and borrowings, often leading to banks hesitating to extend long-term loans.

Joint Hindu family business

A specific form of business organisation found only in India, owned and carried on by the members of the Hindu Undivided Family (HUF) and governed by Hindu Law.

Karta

The head of the Joint Hindu family business who is the eldest member, manages the business, and has unlimited liability.

Co-parceners

Members of a Joint Hindu family business who have equal ownership rights over ancestral property and whose liability is limited to their share of the property.

Hindu Succession Act, 1956

The legislation that governs the Joint Hindu family business, including membership by birth and rights of generations.

Hindu Succession (Amendment) Act, 2005

An amendment that allows the daughter of a coparcener to become a coparcener by birth with equal rights in property, and enables the eldest member (male or female) to become Karta.

Minor Members

Individuals who become members of a Joint Hindu family business due to birth in a Hindu Undivided Family, meaning they do not need to reach the age of majority to join.

Partnership

As defined by the Indian Partnership Act, 1932, it is the relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.

Asa G. Candler

The entrepreneur who acquired business rights to Coca-Cola, became its sole proprietor by 1891 with an investment of $2,300, and later formed The Coca-Cola Corporation in 1892.