Principals of management ppt 2 module

Dazzlers

.
Roll.no:07
BBA 1ST sem

Introduction:

What is sole proprietorship?
A sole proprietorship, also known
as a sole trader or simply a
proprietorship, is a type
of business entity that is owned
and run by one individual and in
which there is no legal distinction
between the owner and the
business.

 The owner receives all profits (subject
to taxation specific to the business)
and has unlimited responsibility for all
losses and debts
 Every asset of the business is owned
by the proprietor and all debts of the
business are the proprietor's.

 Characteristic
 characteristics of sole proprietorship are as
under-
(1) Ownership
The business is owned by a single individual.
(2) Management and control
Being small in size, it is managed by the owner himself.
However, he may have some paid workers to assist him. In
any Case, the ultimate control rests in his hands.
(3) Finance
The necessary capital to run the business is provided by the
sole owner. However, he may borrow from other sources such
as friends or bank as need arises.
(4) Risk
The proprietor himself bears all the risks. No body else has
any stake in the business.

(5) RELATIONSHIP WITH CUSTOMERS
THE SOLE TRADER TRIES TO KEEP GOOD
RELATIONSHIP WITH HIS CUSTOMERS. THE
CUSTOMERS ARE GENERALLY PERSONALLY
KNOWN TO THE PROPRIETOR AND THEIR
ORDERS ARE HIGHER VALUED.

(6) NO LEGAL FORMALITIES
THE SOLE TRADER CAN SET UP OR CLOSE THE
LAWFUL BUSINESS AS AND WHEN HE LIKES THE
OPERATION OF HIS BUSINESS IS NOT GOVERNED BY
ANY SPECIAL ACT OR ORDINANCE.

 (7) Ease of dissolution
The sole trading business is as easy to end or
dissolve as is its formation. The decision of the
proprietor alone ends the business.

o ADVANTAGES

THERE ARE MANY ADVANTAGES
OF CORPORATIONS THAT ARE DESCRIBED
BELOW:
SIMPLE FORM OF ORGANISATION,,
OWNERS FREEDOM TO TAKE DECISION,
HIGH SECRECY,,
EASY WIND-UPS.

 DISADVANTAGES:
 Raising capital for a proprietorship is more difficult
because an unrelated investor has less peace of
mind concerning the use and security of his or her
investment and the investment is more difficult to
formalize;[3]other types of business entities have
more documentation.
 One of the main disadvantages of sole proprietors
is unlimited liability where the owner's personal
assets can be taken away.
 Also, being alone in business, sole proprietors
generally lack money which leads to failure[
 The small size of the business limits the breadth of
management skills because there are fewer people
working together

 PARTNERSHIPS

A partnership is the relationship
existing between two or more persons
who join to carry on a trade or
business. Each person contributes
money, property, labor or skill, and
expects to share in the profits and
losses of the business.

CHARACTERISTIC :
FORMATION
FINANCING
MANAGEMENT
RESTRICTIONON
TRNSFERING OF SHARES
TAXATION

 Characteristic of partnerships:

1. Formation

According to the Partnership Act of 1932, there is
no special mode for the creation of a partnership. If
persons between 2 and 20 enter Into agreement
oral or verbal for carrying on a business, with a
private gain, then partnership is formed (10 in case
of banking business). To avoid a, it is desirable that
the articles of partnership be prepared in writing
with legal assistance. The articles of partnership
should cover the rights, duties, obligations and the
arrangements which the parties have mutually
agreed upon.

 2. Financing
The capital is made available to the firm by the partners
as per terms of the agreement. It is not necessary that
all the partners should contribute equally to the
partnership. A person who has special skill or ability can
be admitted to the partnership without any capita
contribution.

3. Management
In a partnership business, every partner has a right to
take part in its management. The important business
decisions are taken with the consent of all other
partners.

4. Restriction on Transfer of Interest
No partner can transfer h share to any other person
without the prior consent or willingness of all other
partners.

 5. Taxation
. If a firm is registered under the Income Tax Act,
the profit of the firm is first divided among the
partners and then assessed separately.

 ADVANTAGES OF PARTNERSHIPS:

 • Partnerships are relatively easy to establish. With
more than one owner, the ability to raise funds may be
increased, both because two or more partners may be
able to contribute more funds and because their
borrowing capacity may be greater.
 • Prospective employees may be attracted to the
business if given the incentive to become a partner.
 • A partnership may benefit from the combination of
complimentary skills of two or more people. There is a
wider pool of knowledge, skills and contacts.

 • Partnerships can be cost-effective as each partner
specializes in certain aspects of their business.
 • Partnerships provide moral support and will allow
for more creative brainstorming.
 Business Partnership Disadvantages

 • Business partners are jointly and individually
liable for the actions of the other partners.
 • Profits must be shared with others. You have to
decide on how you value each other’s time and
skills. What happens if one partner can put in less
time due to personal circumstances?

 • Since decisions are shared, disagreements can
occur. A partnership is for the long term, and
expectations and situations can change, which can
lead to dramatic split ups.
 • The partnership may have a limited life; it may end
upon the withdrawal or death of a partner.
 • A partnership usually has limitations that keep it
from becoming a large business.
 • You have to consult your partner and negotiate
more as you cannot make decisions by yourself.
You therefore need to be more flexible.

 TYPES OF PARTNERS:
 Active Partner:
 Partner who takes an active part in the management of
the business is called active partner. He may also be
called 'actual' or 'ostensible' partner. He is an agent of
the other partners in the ordinary course of business of
the firm and considered a full fledged partner in the real
sense of the term.
 Sleeping or Dormant Partner:
 A sleeping or dormant partner is one who does not take
any active part in the management of the business. He
contributes capital and shares the profits which is
usually less than that of the active partners. He is liable
for all the debts of the firm but his relationship with the
firm is not disclosed to the general public.


 Sleeping or Dormant Partner:
 A sleeping or dormant partner is one who does not take
any active part in the management of the business. He
contributes capital and shares the profits which is
usually less than that of the active partners. He is liable
for all the de of the firm but his relationship with the firm
is not disclosed to the general public.
 Nominal Partner:
 A partner who simply lends his name to the firm is called
nominal partner. He neither contributes any capital nor
shares in the profits or take part the management of the
business. But he is liable to third parties like other
partners. A nominal partner must be distinguished from
the sleeping partner. While the nominal partner is known
to the outsiders and does not share in the profits, the
sleeping partner shares in the profit a his relationship is
kept secret.

 Partner in Profits:
 A partner who shares in the profits only without being
liable of the losses is known as partner in profits. He
does not take part in the management of the business
but he is liable to third parties for all the debts of the
firm.
 Minor Partner:
 Partnership arises from contract and a minor is not
competent to enter into contract. Therefore, strictly
speaking, a minor cannot be a full-fledged partners. But
with the consent of all the partners he can be admitted
into partnership for benefits only. He is not personally
liable to third parties for the debts of the firm, on
attaining majority, if he continues as a partner, his
liability will become unlimited with effect from the date of
hi original admission into the firm.


THANK
YOU…….
All for listening it…

Principals of management ppt 2 module

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Principals of management ppt 2 module