Business has a long history of evolution to human history, almost parallel to human history. With this long evolutionary process, different forms of ownership have gotten recognition as forms of business.
Different forms of business ownership are as follows.
- Single proprietorship or proprietorship
- Joint proprietorship Business
- Mixed ownership Business
- State owned Business
- Multination Ownership or Multi-National Corporation (MNCs)
Joint proprietorship Business may be of the following types:
- Joint Stock Company or Corporation
Strata owned Business may be of the following types:
- Departmental Business
- Statutory Business
Business may also be of Micro, Small, and Large Scale:
Single proprietorship or proprietorship Business: The business that is owned by a single person is Known as proprietorship or single proprietorship business, this types of business is the is the traditional and usual from of business ownership. A single owner the absolute possessor of the business. He is the decision-market, investor, manager and controller of the business.
“A sole proprietorship is a business owned by one person and operated for his profit” Introduction to Business, p-46, Dr. Raymond E. Gloss and Harold A. Baker.
“The sole proprietorship is that from of business ownership which is owned and controlled by a single individual. “Business An Introductory Analysis, p-161, P. Bayard O. Wheeler.
Characteristics of proprietorship Business
A proprietorship Business is an owner and manager by a single business. This possesses the following Characteristics.
- Single person Owner: A single proprietor owns the proprietorship is business. He is the Owner, initiator and manager f the of the business.
- Owner and Manager: The owner of the single proprietorship is also the manager of the business .Here ownership and management is not separate, as it is case of company or corporation, instead it is integrated.
- Unlimited Liberty: In the sole proprietorship business owner liability is unlimited for the business
The liquidity of business or investment is poor in proprietorship business. The seller must sell his investment or part of it to get his capital returned.
- Entity: The business of proprietorship has no separate entity. The owner’s entity and the business are inseparable.
- Liquidity: The liquidity of business or investment is poor in proprietorship business. The seller must sell his investment or part of it to get his capital returned.
- Tax Treatment: The profit or gain arising from the proprietorship flows to the owner and are taxed with other income of the owner at the personal rates.
- Easy Formation: The formation of proprietorship business is very easy. No legal formation need to be carried out, other than taking some licenses.
- Short Duration: The duration or life span of proprietorship business is usually short period. The death of the owner may cause an end to the life of the business.
- Distribution of the profit: Owner is the absolute possessor of the profit of a sole proprietorship business. So there is no necessity of profit distribution.
- Personal Contact with Outsiders: As a single owner is the proprietorship, manager controller, and supervisor of a sole proprietorship business, he has personal contact with the customer and all other outsiders.
- Strict Control over the Whole Business: As a single owner owns and controls the whole business, he can control the whole business strictly.
- Scope for Absolute Secrecy: The owner of the proprietorship business only can maintain absolute secrecy of the business policies and strategies as there is no possibility of information leakage
- Ease of Localization: Sole proprietorship business may be established at any location for its small size, which is not possible in case types of business.
- Performance Appraisal: The sole proprietor of the business has access over any information of the business, so he can easily appraise the performances and formulate appropriate policies and strategies for the business.
- Termination: Proprietorship business may be termination easily. No legal formalities are required to be carried out in case of termination of proprietorship business. Owner’s inability to run the business may cause sudden termination of the business.