Forms of Business Organisations | Chapter 2 | Business studies | Class 11 | Easiest explanation
Rajat Arora・23 minutes read
The chapter explores different forms of business organizations like Sole Proprietorship and Joint Hindu Family Business, discussing their ownership rights, liabilities, and operations. Sole Proprietorship is owned and managed by a single individual with unlimited liability, while Joint Hindu Family Business involves multiple family members collectively managing the business under a Karta, each having its merits and demerits.
Insights
- Sole Proprietorship is a business structure owned and managed by a single individual, offering simplicity in formation and closure but carrying the risk of unlimited liability and potential disruption in continuity due to personal challenges like illness or death.
- Joint Hindu Family Business, a traditional form in India, involves multiple family members collectively managing the business under the control of a designated head (Karta), with membership based on birth and governed by specific systems and rules. This structure offers benefits such as limited liability and loyalty but faces challenges like limited resources and dominance issues.
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Recent questions
What is Sole Proprietorship?
A business owned and managed by a single individual.
What is Limited Liability in business?
Business debts limited to business assets only.
What is Joint Hindu Family Business?
Business run collectively by family members.
What are the benefits of Sole Proprietorship?
Sense of accomplishment, quick decision-making, confidentiality.
What are the demerits of Joint Hindu Family Business?
Limited resources, dominance issues, lack of expertise.
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Summary
00:00
Forms of Business Organizations and Ownership Rights
- The chapter focuses on different forms of business organizations, including individual shops, partnership businesses, and large companies.
- Five types of ownership rights in business are discussed, starting with Sole Proprietorship.
- Sole Proprietorship refers to a business owned and managed by a single individual.
- Formation and closure of a Sole Proprietorship business are relatively simple, with minimal legal formalities required.
- Sole Proprietors have unlimited liability, meaning personal assets may be used to repay business debts.
- Limited Liability ensures that business debts are limited to the assets of the business only.
- Sole Proprietors bear all risks and profits of the business alone.
- Sole Proprietors have complete control over decision-making and operations of the business.
- Business Continuity may be affected in Sole Proprietorship if the owner faces challenges like illness, imprisonment, or death.
- Merits of Sole Proprietorship include a sense of accomplishment, confidentiality of information, and quick decision-making, among others.
11:54
"Joint Hindu Family Business: Structure and Benefits"
- Sole proprietorship businesses have limited resources and a short lifespan due to lack of continuity.
- These businesses are controlled by one individual and operate day-to-day, making them vulnerable to death or injury.
- Joint Hindu Family Business involves multiple family members running the business together, with no single owner.
- This form of business has been prevalent in India for generations, with family members collectively managing the business.
- Membership in Joint Hindu Family Business is based on birth, with three generations allowed as members.
- The head of the family, known as Karta, controls the business and makes decisions.
- Two systems exist within Joint Hindu Family Business: Dayabhaga and Mitakshara, each with specific rules and locations.
- The formation of Joint Hindu Family Business is governed by the Hindu Succession Act 1956, requiring at least two members and ancestral properties.
- Benefits of this business structure include limited liability, loyalty, cooperation, and effective control under the Karta, while demerits include limited resources, dominance issues, and lack of expertise in all areas.
