TYPES OF BUSINESS CONCERNS

Illustrative diagram of the yellow card of companies incorporation of the types of business concerns.

    Business concerns are not all of one type. From the points of economic view of capitalization, the legal control and management, the various types of business organization are as follows-

                                                       THE SOLE TRADER

         He provides the initial capital himself or borrows it from Friends or from a bank on overdraft, if the person of substance is prepared to guarantee Repayment. In the second case, probably and in the third case, certainly, the borrower has to pay interest on the sum borrowed. This constitutes an initial handicap. Control of business is however, entirely in the sole trader’s own decisions and if he is prudent enough by not feeding on his own supply or resources, tactful and energetic, enterprising, technically proficient and God fearing in the particular business undertaken, and is not hampered by lack of capital, he may as often been done before succeed in building up a sound business. The disadvantages of this type of business lie in the difficulty of providing further capital for expansion. If the business involves the keeping of a shop, the personal care given to customers by the trader will count for much, but even this advantage is not so great as it used to be, and the competition of large departmental and multiple chain stores and bazaars often makes it difficult for the single shop owner to operate at an adequate profit. Some of the large competitors however had their origin in the single shop.

                                THE GENERAL PARTNERSHIP-

       Partnership according to the partnership act of 1890 is the relation which subsists between persons carrying on business in common with a view   of profit. By the companies Act of 1929, a partnership formed for carrying on the business banking may not consist of more than ten members and for any other business having as its object the acquisition of gain the number of partners may not exceed twenty. The members of a partnership are collectively known as a firm and the name they trade under is the firm’s name. The firm name may be distinct from the true name of each partner must be registered and the partners true names must be stated on the notepaper, circulars and other business documents issued by the firm. The liability of a partner is joint with all the other partners, not several. That is there is only one liability –the firm’s liability and each partner is liable for the debts of a firm to his last penny.

                                            THE PARTNERSHIP ARTICLES

        The rights and duties of the partners as between themselves are usually set out in a document to which each partner subscribes known as an Agreement, or Deed or Articles of partnership. Partnership can exist without the partners entering into such agreement, but the deed of partnership drawn up by a solicitor is always advisable. The nature and value of duties or interest of any partner can vary from those of any other partner to any extent, as may be agreed between them. Thus of two partners on may contribute all the capital, the other all the skill. One may take three quarters of the profits and the other only a quarter. One may be paid a salary in addition to receiving his share of the profits, the other not. One may be in sole control of the business, the other do nothing but receive his share of the profits. Sometimes interest may be allowed on capital before the profits are shared, sometimes interest may be charged on the partners drawings, while under the deeds no interest on drawings is chargeable. Besides regulating all such matters, the Deed of a partnership will determine what is to happen on the dissolution or of a partnership and for the treatment on dissolution of a partnership or the retirement of a partner, of that important asset of a business is known as Goodwill.          The partnership Deed may provide that the partnership shall continue for a fixed period of time and the partnership is dissolved at the expiration of the time fixed. But if the partnership is continued after that time and no fresh agreement is made, it becomes a partnership where no fixed period is agreed for its duration, is terminable at any given time by any partner upon his or her giving notice to determine to each of his co-partners. Partnership agreements invariably bind the patterns to settle any disagreement that may arise by.