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Business :

The human activity performed by individual or organisations of manufacturing , extracting, or buying & selling of goods or providing services in exchange for other goods , services or money, to the mutual benefits of the individuals or organisation concerned .

Functions of Business

1.Production :- Production involves the manufacture of goods or provision of services.

2.Personnel functions :- This involves in concentration with obtaining the best possible types of workers and creating the environment in which they can work most efficiently by providing appropriate pay, training and working arrangements.

3.Finance :- This is essential in any business in order to pay for suppliers and invest in new equipments , building and other assets .

4.Marketing :- This involves the research of the market and the needs and requirements of the customers .

TYPES OF BUSINESS ORGANISATIONS

Sole Trader :- In this form of business organisation one person provides the capital or permanent finance & in return , retains full control of the business & enjoys all the profits . He/ she is also liable for any debts of the business.

There are no legal formalities of forming the business as a sole trader . But under the Business Act 1985 a business using a trade name must conform to 3 basic requirements: -

a)The name of the owner must be displayed on all documents.
b)The owner must disclose information relating to ownership to any one who has dealings with the business.
c)A notice concerning ownership must be displayed in the business premises.

• Advantages

The owner has his own freedom to do what ever he wants to do.
He needs not to consult with any one while taking any decision, and thus no time is also wasted.
He /she alone enjoys the profit.
He /she has personal contact with the workers and customers.
Any new business strategy being taken needs not to be disclosed to others.

• Disadvantages

The source of finance is limited.
The firm is likely to grow.
The success depends upon the owner’s energy and continuing fitness.
All loss has to be borne by him/her.
No continuity possible if the owner dies.

Partnership : A partnership is an association of individuals and is not a legal entity in its own right . Consequently it cannot sue or be sued in its own name, but instead each of the partners has to be named. Each partner is liable for any debt of the business. Moreover, every partner, when acting on behalf of the firm, acts as an agent of the partnership and can thus bind his or her fellow partners.

• Advantages

The source of finance is more.
As a number of partners are available, each can select each of the responsibilities of the business.
The partners share the losses.
As a number of partners are available, each of them are expected to be specialized different sectors.

• Disadvantages

The profits are shared among the partners.
There may be argument between each of the partners.
If a partner makes a decision the other partners has to agree to that decision.
The partners have unlimited liability.

 The partnership agreement should deal with :-

The nature of the business, and date of commencement.
The amount of capital put into the business by each of the partner.
The method by which the profits and losses are to be shared.
The voting rights.
The role of each partner.
The duration of the partnership, and methods of dissolving the partnership.
Arbitration procedure if partners cannot reach agreement.
Arrangements to cover absence, retirement and the admission of new partner.
Arrangements concerning finance, book – keeping, etc.
Authority to sign contracts.

 If there is no written partnership deed , then the partners :-

are entitled to an equal share of the profits .
are entitled to participate in the management of the business .
decisions are settled on a majority basis .

Limited liability (joint stock) company :- Companies differ from partnership , sole trader , in that the act of incorporation creates a new legal entity distinct from the shareholders who own the company.
Companies can make contracts and sue or be sued. All action taken by the company, including the contracting of debt, are actions of the company rather then the actions of the individual owners.
The shareholders enjoy the privilege of limited liability, which means that they are only liable for debts amounting to what they have spent on the business.

•Private Limited Companies :- This type of companies are found in the private sector , and are owned by a number of shareholders who have limited liability . The business is not allowed to sell share in the Stock Exchange.

•Public Limited Company :- This type of companies are found in the private sector , and are owned by a number of shareholders who have limited liability . The business is allowed to sell share in the Stock Exchange to raise funds.