Explaining, What is Partnership? and learn, How Does it work in Business?
A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach. A partnership may result in issuing and holding equity or may only govern by a contract. Also learn, What are the Features of Sole Proprietorship? Partnership: How Does it work in Business?
History!
Partnerships have a long history, they were already in use in Medieval times in Europe and in the Middle East. In Europe, the partners contributed to the Commercial Revolution which started in the 13th century. In the 15th, century the cities member of the Hanseatic League would mutually strengthen each other; a ship from Hamburg to Danzig, would not only carry its own cargo but was also commissioned to transport freight for other members of the league. This practice not only saved time and money; but also constituted the first step toward partners. This capacity to join forces in reciprocal services became a distinctive feature, and a long-lasting success factor, of the Hanseatic team spirit.
Meaning!
A partnership is a formal arrangement in which two or more parties cooperate to manage and operate a business. Various partnership arrangements are possible: all partners might share liabilities and profits equally, or some partners may have limited liability. Not every partner is necessarily involving in the management and day-to-day operations of the venture. Such as in the case of a “silent partner.” In some jurisdictions, partners enjoy favorable tax treatment relative to corporations.
Definition!
“A type of business organization in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement. In absence of such agreement, a partnership is assumed to exit where the participants in an enterprise agree to share the associated risks and rewards proportionately”.
How does it work in Business?
Business-partners is similar to a personal-partners. Both business and personal involve:
Pooling money toward a common purpose.
Sharing individual skills and resources, and.
Sharing in the good and bad times.
A business-partners is a specific kind of legal relationship form by the agreement between two or more individuals to carry on a business as co-owners. Also, A business with multiple owners, each of whom has invested in the business. Some partners include individuals who work in the business. While other partnerships may include partners. Who has limit participation and also limited liability for the debts and lawsuits against the business?
As different from a corporation, is not a separate entity from the individual owners. The partner’s income tax is paid by the partners, but the profits and losses are divided among the partners, and paid by the partners, based on their agreement. As well as, a sole proprietorship, is a pass-through business, meaning that the profits and losses of the business pass through to the owners. Also learn, What is Leadership?
Thanks, Also, Photo Credit to pixabay.com/ More free Images!
Reference!
1. Meaning – //www.investopedia.com/terms/p/partnership.asp
Sole proprietorship highlights or characteristics or Features; It refers to a business organization in which enterprises are controlled or owned by a single person. The sole proprietorship is the oldest form of business enterprise in India. It is the simplest form of business and all the risks or losses are bearer by a single person. Also, if he wants any help they can get it from their friends, family, or relatives. It doesn’t require any legal recognition or formalities and the simplest way to open a business. Also learn, Sole Proprietorship: the Advantages and Disadvantages!
Explaining, What are the highlights or characteristics or Features of Sole Proprietorship?
Also, A sole proprietorship is a business owned by a single individual. This sole owner is responsible for the entire business and is the sole recipient of the business’s earnings. Unlike other legal structures, the sole proprietorship requires less paperwork and is subject to few business restrictions and regulations.
15 best Features of Sole Proprietorship:
The main highlights or characteristics or features of the sole proprietorship form of business can list as follows:
One Man Ownership:
In the proprietorship, only one man is the owner of the enterprise.
No Separate Business Entity:
No distinction is made between the business concern and the proprietor. Both are the same.
No Separation between Ownership and Management:
In the proprietorship, management rests with the proprietor himself/herself. The proprietor is a manager also.
Unlimited Liability:
Unlimited liability means that in case the enterprise incurs losses, the private property of the proprietor can also utilize for meeting the business obligations to outside parties. As there is no division between the business and the business person, accordingly the individual risk of the entrepreneur is boundless. If the business can’t pay its obligations and liabilities, at that point, the entrepreneur is responsible for the equivalent and pay them. For example, the proprietor needs to pay the forthcoming sum either by selling their resources or property, a house, care, and others.
All Profits or Losses to the Proprietor:
Being the sole owner of the enterprise, the proprietor enjoys all the profits earned and bears the full brunt of all losses incurred by the enterprise.
A Less-Formalities:
A proprietorship business can start without completing many legal formalities. Some businesses too can start simply after obtaining the necessary manufacturing license and permits.
Personal Organization or Common Identity:
A sole traders’ concern has no separate legal entity independent of the owner. The owner and the business concern are the same. The owner owns everything the business owns and he owes everything the business owns.
Capital:
In the sole traders, the capital is employing by the owner himself from his personal resources. He may also borrow money from his friends and relatives if he cannot depend solely on his personal resources.
Profits and Losses:
The surplus arising in the business of the sole trader entirely belongs to him and similarly, all the business losses and risks are to be borne by him alone.
No Special Legislation:
Sole traders are not governing by any special legislation. A partnership firm is governing by the Partnership Act, a joint-stock company is governing by the Companies Act, and a co-operative society by the Co-operative Societies Act. Any person who is competent to contract can start his business as a sole trader. However, he is subject to the common law, the law of contract, and the law of insolvency.
The concept of Unlimited Liability. As well as, the liability of a shareholder or member of a company or a co-operative society limits to the extent of the face value of the shares held by him. Forexample, if Mr. X subscribes to 100 shares of Rs. 10 each, his total liability is unto Rs. 1,000 only. If he has already paid Rs.5 per share, his liability will restrict to the unpaid portion of his shares, i.e., Rs. 500 only. Thus, there is a limit to the extent of liability of the shareholder of a company.
Thanks, Also, Photo Credit to pixabay.com/ More free Images!
No Legal Formalities:
There is no different law-related with a sole proprietorship to oversee it and accordingly, there is no presence of any arrangement of extraordinary standards just as guidelines to follow. Also, best of all, it doesn’t require either any enrollment or consolidation of any sort. Much of the time, we require just the permit to fire up the ideal business. Like that of the beginning, there are no legitimate tasks joined to the end methods. Along these lines, it gives effortlessness to start a business and do it with less issue.
Danger and Profit:
The proprietor of this business is the danger carrier in a sole exclusive. Since the business person is the main individual who put resources into the business monetarily, so all dangers have a place with him in particular. Regardless of whether the business fizzles or develops, the proprietor is the individual who gets influenced by the equivalent. Actually, he additionally appreciates all benefits acquired from the business. There is no compelling reason to separate and offer benefits with partners as there is no presence. Consequently, he bears all dangers and acquires benefits as well.
No different legitimate character:
In legitimate terms, the business and the proprietor are not treated independently as both are the one and same thing. No different legitimate element has a place with a sole owner and the proprietor is entirely and solely answerable for all business exercises and exchanges.
Progression:
As we as a whole realize that the business and the proprietor have a similar character. In this way, a sole proprietorship has altogether depended on the entrepreneur. A few variables influence a sole proprietorship, for example, retirement, craziness, demise, and detainment. In such a circumstance, the sole proprietorship puts to an end.
Control:
As all the business activities and duties lie with the sole owner, so he controls all the business solely. No other individual can participate in business exercises and the proprietor can alter or grow the business according to their solace and plans.
These are altogether highlights or characteristics or features of a sole proprietorship that will clarify what precisely the business structure and how it runs. Let us take a look at the upsides of selecting a sole proprietorship that we will write down underneath.
Sole Proprietorship Disadvantages and Limitations; A sole proprietorship is the simplest and most common legal structure someone can choose. It’s an unincorporated business owned and run by one individual in which there is no distinction between the business and the owner. If you own a sole proprietorship, you are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities. Also learn, How to Explain, What is Sole Proprietorship?
Learn and Study, What are the Limitations or Disadvantages of Sole Proprietorship? Explaining are, Easy Point, Trade, Multipoint!
In other words, the owner remains personally liable for any losses or debts that the sole proprietorship incurs. They can also, held legally responsible for violations committed by the business or its employees. A sole proprietorship can best sum up by the phrase, “You are the business”. Also learned, What are the Advantages of Sole Proprietorship?
Easy of the Limitations or Disadvantages of Sole Proprietorships:
Forming a sole proprietorship does involve some risks, mainly to the owner of the business, as legally speaking they are not treating separately from the business. Some limitations or disadvantages of sole proprietorships are:
Liability:
The business owner will hold directly responsible for any losses, debts, or violations coming from the business. For example, if the business must pay any debts, these will satisfy the owner’s own personal funds. The owner could sue for any unlawful acts committed by the employees. This is drastically different from corporations, wherein the members enjoy limited liability (i.e., they cannot hold liable for losses or violations)
Taxes:
While there are many tax benefits to sole proprietorships, the main drawback is that the owner must pay self-employment taxes. Also, some tax benefits may not be deductible, such as health insurance premiums for employees
Lack of “continuity”:
The business does not continue if the owner becomes decreasing or incapacitating since they are treating the same. Upon the owner’s death, the business is liquidating and becomes part of the owner’s personal estate, to distribute to beneficiaries. This can result in heavy tax consequences on beneficiaries due to inheritance taxes and estate taxes
Difficulty in raising capital:
Since the initial funds are usually providing by the owner, it can be difficult to generate capital. Sole proprietorships do not issue stocks or other money-generating investments like corporations do
So, while sole proprietorships do not necessarily create more liabilities, they do expose the business owner to a risk of being sue. Lawsuits can file against the business owner for legal violations, as well as to collect any outstanding debts.
Business; Proprietorship form of ownership suffers from some disadvantages or limitations also.
The important ones are:
1. Limited Resources:
A proprietor has limited resources at his/her command. The proprietor mainly relies on his/her funds and savings and, to a limited extent, borrowings from relatives and friends. Thus, the scope for raising funds is highly limited in proprietorship. This, in turn, deters the expansion and development of an enterprise.
2. Limited Ability:
The proprietorship is characterized as the one-man show. One man may be an expert in one or two areas, but not in all areas like production, finance, marketing, personnel, etc. Then, due to the lack of adequate and relevant knowledge, the decisions take him imbalanced.
3. Unlimited Liability:
The proprietorship is characterized by unlimited liability also. It means that in case of loss, the private property of the proprietor will also use to clear the business obligations. Hence, the proprietor avoids taking the risk.
4. Limited Life of Enterprise Form:
The life of a proprietary enterprise depends solely upon the life of the proprietor. When he dies or becomes insolvent or insane or permanently incapacitated, there is every likelihood of closure of enterprise. Say, the enterprise also dies with its proprietor. The Steps of Manpower Planning with Features!
Disadvantages of sole trading include that:
You have unlimited liability for debts as there’s no legal distinction between private and business assets.
Your capacity to raise capital is limited.
All the responsibility for making day-to-day business decisions is yours.
Retaining high-caliber employees can be difficult.
It can be hard to take holidays.
You’re tax as a single person, and.
The life of the business is limited.
7 best Limitations or Disadvantages of Sole Proprietorship:
The following limitations and disadvantages below are;
(i) Limited Resources:
The resources of a sole proprietor are limited. He makes investments from his family source only. There is a limit to which a single person can invest. He tries to raise finances from financial institutions also. These institutions want securities for their loans. The sole trader cannot offer much security, so he does not get much help from financial institutions. The capacity for expanding business operations is limited for want of resources, even when there is a scope for expansion. Other forms of ownership are better than the sole proprietor for raising financial resources.
(ii) Limited Managerial Ability:
One person may not be an expert in every function of the business. He will not be able to devote sufficient time to all types of activities. He will have to depend on paid employees. The employees may not take as much interest as the owner himself can take. What is the Process of Manpower Planning?
The managing capacity of the proprietor is limited. In the present competitive world, the complexities of managerial jobs are increasing every day. The sole proprietor may not be able to use the services of experts for want of resources. So one person will not be able to survive effectively. On the other hand, his limited resources will not allow him to use the services of professional people. Limited managerial capacity will hinder the growth of the business.
(iii) Unlimited Liability:
The liability of a sole proprietor is limited. His private property can also assign to meeting business obligations. A loss of business may deprive him of his private assets also. Unlimited liability also restricts his work. He tries to be cautious in taking the risk. It acts as a detriment to the growth of business activities.
(iv) Uncertain Continuity:
The business continues as far as the sole proprietor is there. In case of his mobility or death, the business is discontinuing. The successors of the sole proprietor may not have an aptitude or ability to continue in the business. The closure of a business will cause inconvenience to the consumers. It will also result in social loss.
(v) Limited Scope for Employees:
A sole trader cannot attract trained and qualified persons for reasons of limited career opportunities. Moreover, the continuity of sole trade business being uncertain the employees also remain under psychological pressure. A sole proprietor cannot offer financial incentives to employees because his activities are on a small scale. The employees will try to join good concerns whenever an opportunity arises.
(vi) No Large-Scale Economies:
A small-scale concern cannot economize in the purchase, production, and marketing. A large-scale enterprise will be able to have favorable terms for purchasing and selling of goods. In a sole trade concern, overhead expenses are also more. So this type of concern cannot enjoy the benefits of large-scale economies.
(vii) More Risk Involved:
A sole proprietor is to take all decisions by himself. So there is a possibility of taking wrong decisions. In other forms of organization, the decisions are taking by more than one person. So the possibility of mistakes and wrong decisions is minimizing. Lack of counseling may create difficult situations.
Photo Credit to pixabay.com/ More free Images!
Reference!
1. Easy and business Points – //www.legalmatch.com/law-library/article/advantages-and-disadvantages-of-sole-proprietorships.html and //www.yourarticlelibrary.com/sole-proprietorship/sole-proprietorship-features-advantages-and-disadvantages/40806
Sole Proprietorship Advantages; Proprietorship (also called sole trade organization) is the oldest form of business ownership in India. In a proprietorship, the enterprise is owned and controlled by one person. He is the master of his show, he shows, reaps, and harvests the output of this effort, he manages the business on his own. If necessary, he may take the help of his family members, relatives, and employ some employees. Also learn, How to Explain, What is Sole Proprietorship?
Learn and Study, What are the Advantages of Sole Proprietorship? Explaining are, Easy Point, Trade, Multipoint!
The sole proprietorship is the simplest and easiest to form. It does not require legal recognition and attendant formalities. This form is the most popular in India due to the distinct advantages it offers. William R. Basset opines that “The one-man control is the best in the world if that man is big enough to manage everything”. Also learned, Corporate Entrepreneurship Categories, and Organizational Thinking.
Some of the Easy Advantages of Sole Proprietorship:
There are many reasons why a person would choose to start their business up using a sole proprietorship structure. Some of the main advantages of sole proprietorships include:
Ease of formation:
Starting a sole proprietorship is much less complicated than starting a formal corporation, and also much cheaper. Some states allow sole proprietorships to form without the double taxation standards applicable to most corporations. As well as, the proprietorship can name after the owner, or a fictitious name can be used to enhance the business’ marketing.
Tax breaks:
The proprietor of a sole proprietorship isn’t needed to record a different business charge report. All things considered, they will list business data and figures on their individual assessment form. This can spare extra expenses on bookkeeping and assessment recording. As well as, the business will charge at the rates apply to individual pay, not corporate assessment rates.
Employment:
Sole proprietorships can enlist representatives. This can prompt a considerable lot of the advantages related to work creation, for example, tax cuts. Likewise, companions of the entrepreneur can utilize without being officially proclaimed as a worker. Hitched couples can likewise begin a sole proprietorship, however, the obligation can just accept by one person.
Decision making:
Authority over all business choices stays in the possession of the proprietor. Also, the proprietor can likewise completely move the sole proprietorship whenever as they esteem important.
Some Advantages that proprietorship form of business offers are as follows;
1. Simple Form of Organization:
The proprietorship is the simplest form of organization. The entrepreneur can start his/her enterprise after obtaining licenses and permits. There is no need to go through the legal formalities. For starting a small enterprise, no formal registration is statutorily needed.
2. Owner’s Freedom to Make Decisions:
The owner, i.e. the proprietor is free to make all decisions and reap all the fruits of his labor. There is no other person who can interfere or weigh him down. Why is Intrapreneurship Better than Entrepreneurship?
3. High Secrecy:
Secrecy is another major advantage offered by proprietorship. This is because the whole business is handled by the proprietor himself and, as such, the business secrets are known to him only.
Added to it, the proprietor is not bound to reveal or publish his accounts. In the present-day business atmosphere, the less a competitor knows about one’s business, the better off one is. What the competitors can make is guesstimates only.
4. Tax Advantage:
As compared to other forms of ownership, the proprietorship form of ownership enjoys certain tax advantages. For example, a proprietor’s income is taxed only once while corporate income is, at occasions taxed twice, say, double taxation.
5. Easy Dissolution:
In the proprietorship business, the entrepreneur is all in all. As there are no co-owners or partners, therefore, there is no scope for the difference of opinion in the case the proprietor/entrepreneur-wants to dissolve the business. It is due to the easy formation and dissolution, the proprietorship is often used to test the business ideas.
Advantages of sole trading include that:
You’re the boss.
You keep all the profits.
Start-up costs are low.
You have maximum privacy.
Establishing and operating your business is simple.
It’s easy to change your legal structure later if circumstances change, and.
14 best Multipoint Advantages of Sole Proprietorship:
The following multipoint advantages below are step by step;
(i) Easy in Formation:
The sole proprietorship is the only form of organization where no legal formalities are requiring to perform. Also, Anybody wishing to start a sole trade concern can do so without loss of time. This business is absolutely free from legal formalities. On the other hand, if a joint-stock company is to form it needs the services of experts to get it incorporate, and it involves a lot of labor and money.
(ii) Better Control:
In this form of organization one man is responsible for all types of activities. He controls all functions of the business. He himself takes decisions at the appropriate time. The authority and responsibility lie with one man. He cannot afford to be complacent in taking decisions. If the responsibility is divided, then there can a possibility of shifting obligation to other persons (Everybody’s responsibility becomes nobody’s responsibility). Insole trade business, there is no such difficulty. As well as, the owner is all in all and he cannot escape his work. The business is controlled effectively.
(iii) Flexibility in operations:
A sole proprietorship concern is generally run on a small scale basis. In case a change in operation is requiring, it can be possible without involving much expenditure. Even if a new line of products is to take up, it will not involve many efforts. On the other hand, if the operations are on a large scale, then it becomes difficult to change the method of production.
A small-scale concern can adjust its production according to the changing demand pattern. It can increase and decrease its products as per requirements. Moreover, no legal formalities are requiring for making changes in operations. As well as, a joint-stock company cannot go beyond its objective clause. Because of being flexible in operations, a sole trade concern is most suitable for industries dealing with fashionable and seasonal goods.
(iv) Retention of Business Secrets:
A sole trader maintains business secrets. Being the sole proprietor, he is not expected to share his trade secret with anybody else. As well as, He is not expected to publish his accounts. He can maintain secrecy from his competitors. Secrecy is very important for small-scale concerns.
(v) Easy to Raise Finance:
An individual entrepreneur can create goodwill for his business. This helps him to establish his creditworthiness in the market. Secondly, the liability in a sole trade organization being unlimited, the creditors can have a claim over the private property of the owner. As well as, the creditors feel secure in extending credit to individual proprietors. Moreover, they try to repay the loans as quickly as possible so that they do not lose goodwill in the market. Once a sole trader loses his creditworthiness, he will not be able to get much help from the market.
(vi) Direct Motivation:
The proprietor takes a keen interest in the working of the business. He tries to put heart and soul into the business to earn as many profits as he can. There is a direct relationship between efforts and rewards. In other forms of organization, the profits are shared by more than one person. So everybody may not put in his best efforts.
(vii) Promptness in Decision Making:
All important decisions are taking by one person. He can take prompt decisions. He will not let an opportunity slip away. If more than one person is involving in decision making then delay is bound to occur.
(viii) Direct Accessibility to Consumers:
In insole proprietorship the scale of operations is small. The owner can have direct contact with customers and employees. He can know the relations and preferences of consumers. It enables him to make necessary changes in the quality and design of his products. It will help him to boost his sales. He can also emphasize consumer service.
(ix) Inexpensive Management:
The sole trader is the owner, manager, and controller of the business. He does not appoint specialists for various functions, he personally supervises various activities and can avoid wastage in the business, he does not create managerial paraphernalia. In this way, managerial costs are saving to a large extent.
(x) No Legal Restrictions:
There are no legal requirements for starting a business. No special acts are governing the work of a sole proprietor. As well as, the proprietor is not requiring to submit the results of his business to any authority. There is no restriction in changing the nature of the business. Even the dissolution of the business can easily undertake. The tax liability on a sole trader is also low. He is a tax as an individual and not as a business unit.
(xi) Socially Desirable:
One man business is generally on a small scale basis. Large numbers of sole traders have entered all types of business. It helps in avoiding the concentration of wealth. Large-scale business leads to wealth accumulation in a few hands. Also, the Sole trader business provides competition for other businesses. The consumers will not be dependent upon big business houses. So, the sole trade business is socially desirable.
(xii) Self-Employment:
The sole proprietorship form of organization offers the means of self-employment to those who do not want to serve others. As everyone cannot get a suitable job to earn his livelihood in a developing country, the individuals can easily start a small-sized business unit as a sole trader.
(xiii) Healthy Relations with Employees:
A sole trader is in a position to maintain direct relations with his employees. This enables the employer and the employees to understand and appreciate the difficulties of each other. Moreover, a sole trader can quickly solve the grievances of his employees. This results in healthy relations between employers and employees which is of vital importance to the success of the business.
(xiv) The benefit of Inherited Goodwill:
A sole trader passes on the business goodwill to his successor. Technically a sole trade business is dissolving on the death of the owner but in reality, the same business is continuing by an heir. Also, the goodwill which one person earns during his lifetime is passing on to those who continue that business.
Photo Credit to pixabay.com/ More free Images!
Reference!
1. Easy and business Points – //www.legalmatch.com/law-library/article/advantages-and-disadvantages-of-sole-proprietorships.html and //www.yourarticlelibrary.com/sole-proprietorship/sole-proprietorship-features-advantages-and-disadvantages/40806 2. Trade Points – //www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/sole-proprietorship-advantages-and-disadvantages 3. Main/Multipoint – //www.yourarticlelibrary.com/business/advantages-and-disadvantages-of-sole-proprietorship/42037
A sole proprietorship (In Hindi), also known as the sole trader or simply a proprietorship, is a type of enterprise. That is owned and run by one natural person and in which there is no legal distinction between the owner and the business entity. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. Also learn,What is Manpower Planning? Example, with Importance.
Learn and Study, What is Sole Proprietorship? Meaning and Definition.
A sole proprietor may use a trading name or business name other than his, her, or its legal name. They may have to legally trademark their business name if it differs from their own legal name. The process varying depending upon the country of residence. The sole trader receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. The proprietor owns every asset of the business, and all debts of the business are the proprietors. It is a “sole” proprietorship in contrast with partnerships (which have at least two owners).
Meaning of Sole Proprietorship:
A sole proprietorship, also known as a sole trader or a proprietorship, is an unincorporated business with a single owner. Who pays personal income tax on profits earned from the business. With little government regulation, a sole proprietorship is the simplest business to set up or take apart. Making sole proprietorships popular among individual self-contractors, consultants, or small business owners. Many sole proprietors do business under their own names because creating a separate business or trade name isn’t necessary. Alsolearn the Definition, Importance, and Affected Factors of Manpower Planning.
Definition of Sole Proprietorship:
Simplest, oldest, and most common form of business ownership in which only one individual acquires. All the benefits and risks of running an enterprise. In a sole-proprietorship. There is no legal distinction between the assets and liabilities of a business and those of its owner. It is by far the most popular business structure for startups because of its ease of formation. Least record-keeping, minimal regulatory controls, and avoidance of double taxation.
Also, A sole proprietorship is an unincorporated business owned by one individual, making it the simplest form of business to start and operate. Over 20 million sole proprietorships are operating in the United States and Canada, making it by far the most popular form of business ownership.
The key feature of the sole proprietorship definition is that unlike an incorporated business or a partnership there is no legal separation between the business and the owner in a sole proprietorship – the business is considering to be an extension of the owner and as such the owner is personally responsible for any debts or liabilities incurred by the business.
An Example of a Sole Proprietorship:
Most small businesses start as sole proprietorships and change to different legal structures as they grow. For example, in 2005, Kate Schade started her company, Kate’s Real Food, as a sole proprietor. The company creates and sells energy bars, and it began as a local vendor in Schade’s town of Victor, Idaho. The sole proprietorship sold its energy bars at local farmer’s markets and then expanded to sell online and to a few accounts in Jackson, Idaho.
Personal liability for business debts:
A sole proprietor can hold personally liable for any business-related obligation. This means that if your business doesn’t pay a supplier, defaults on a debt, or loses a lawsuit, the creditor can legally come after your house or other possessions.
Examples:
Example 1: Lester is the owner of a small manufacturing business. When business prospects look good, he orders $50,000 worth of supplies and uses them in creating merchandise. Unfortunately, there’s a sudden drop in demand for his products, and Lester can’t sell the items he’s produced. When the company that sold Lester the suppliers demand payment, he can’t pay the bill. As the sole proprietor, Lester is personally liable for this business obligation. This means that the creditor can sue him and go after not only Lester’s business assets but his other property as well. This can include his house, his car, and his personal bank account.
Example 2: Shirley is the owner of a flower shop. One day Roger, one of Shirley’s employees, is delivering flowers using a truck owned by the business. Roger strikes and seriously injures a pedestrian. The injured pedestrian sues Roger, claiming that he drove carelessly and caused the accident. The lawsuit names Shirley as a co-defendant. After a trial, the jury returns a large verdict against Roger and Shirley as the owner of the business. Shirley is personally liable to the injured pedestrian. This means the pedestrian can go after all of Shirley’s assets, business, and personal.
By contrast, the law provides owners of corporations and limited liability companies (LLCs) with what’s called “limited personal liability” for business obligations. This means that, unlike sole proprietors and general partners, owners of corporations and LLCs can normally keep their house, investments, and other personal property even if their business fails. If you will engage in a risky business, you may want to consider forming a corporation or an LLC. You can learn more about limiting your personal liability for business obligations by reading Nolo’s articles on corporations and LLCs.
Registering your sole proprietorship:
Unlike an LLC or a corporation, you generally don’t have to file any special forms or pay any fees to start working as a sole proprietor. All you have to do is declare your business to be a sole proprietorship when you complete the general registration requirements that apply to all new businesses. Also, learn the advantages anddisadvantages of the sole proprietorship.
Most cities and many counties require businesses, even tiny home-based sole proprietorships, to register with them and pay at least a minimum tax. In return, your business will receive a business license or tax registration certificate. You may also have to obtain an employer identification number from the IRS, a seller’s permit from your state, and a zoning permit from your local planning board.
Also, And if you do business under a name different from your own, such as Custom Coding, you usually must register that name, known as a fictitious business name, with your county. In practice, lots of businesses are small enough to get away with ignoring these requirements. But if you are caught, you may be subject to back taxes and other penalties.
Thanks, Also, Photo Credit to pixabay.com/ More free Images.
Management is an art and science and it is a continuous activity. It is a factor of production and it is an organized activity. Management aims at maximizing profit with ethical behavior. It is a profession by itself and involves decision making. It is needed in all levels and develops leadership qualities in people. Planning, organizing, staffing, directing, coordinating, motivating and controlling are the functions of management. How to Explain Techniques of Scientific Management?
Explanation of following Processes of Scientific Management
Planning
The process of making plans for something.
The control of urban development by a local government authority, from which a license must be obtained to build a new property or change an existing one.
Organizing
Arrange systematically; order. coordinate the activities of (a person or group) efficiently. form (a number of people) into a trade union or other political group.
Make arrangements or preparations for (an event or activity). take responsibility for providing or arranging.
Staffing
Staffing is the process of hiring, positioning and overseeing employees in an organization.
Definition of staffing: The selection and training of individuals for specific job functions, and charging them with the associated responsibilities.
Directing
Control the operations of; manage or govern. supervise and control (a film, play, or other production, or the actors in it).
Aim (something) in a particular direction or at a particular person. focus (one’s thoughts) on or address (one’s efforts) towards something.
Give (someone) an official order or authoritative instruction.
Coordinating
Bring the different elements of (a complex activity or organization) into a harmonious or efficient relationship. negotiate with others in order to work together effectively. match or harmonize attractively.
Motivating
Provide (someone) with a reason for doing something. cause (someone) to have an interest in or enthusiasm for something. request (something) and present facts and arguments in support of one’s request.
Controlling
Determine the behavior or supervise the running of. maintain influence or authority over. limit the level, intensity, or numbers of. remain calm and reasonable despite provocation.
Take into account (an extraneous factor that might affect the results of an experiment).
What is Scientific Management;Also called Taylorism is a theory of management that analyzes and synthesizes workflows. Its main objective is improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management.How Do You Know Your Company Wants Help From The Outside?
Notes: You will come to know the definitions of all the sevenProcesses of Scientific Management;Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling.
The word entrepreneur derives from the French words entre, meaning “between,” and Prendre, meaning “to take”. The word originally used to describe people who “take on the risk” between buyers and sellers or who “undertake” a task such as starting a new venture. Inventors and entrepreneurs differ from each other. An inventor creates something new. This article explains to Entrepreneurship Meaning and Definition. An entrepreneur assembles and then integrates. All the resources needed the money, the people, the business model, the strategy, and the risk-bearing ability to transform the invention into a viable business.
Learn and understand, Explains to Entrepreneurship Meaning and Definition.
Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control. Others such as venture capitalist Fred Wilson define it more simply, seeing entrepreneurship as the art of turning an idea into a business.
Meaning of Entrepreneurship:
Entrepreneurship is the process of designing, launching and running a new business, which is often initially small. The people who create these businesses are called entrepreneurs. Entrepreneurship has described as the “capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit”.
While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up. A significant proportion of start-up businesses have to close due to “lack of funding, bad business decisions, an economic crisis, lack of market demand—or a combination of all of these.
Definition of Entrepreneurship:
The capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit. The most obvious example of entrepreneurship is the starting of new businesses. Also learn,What is the Difference between Leadership and Entrepreneurship?
In economics, entrepreneurship combined with the land, labor, natural resources, and capital can produce the profit. The entrepreneurial spirit is characterizing by innovation and risk-taking and is an essential part of a nation’s ability to succeed in an ever-changing and increasingly competitive global marketplace.
Explaining are entrepreneurship by Example:
In essence, an entrepreneur’s behavior finds him or her trying to identify opportunities and putting useful ideas into practice. After the meaning and definition of entrepreneurship, you need to know better by Best entrepreneurs example. The tasks called for by this behavior can accomplish by either an individual or a group and typically require creativity, drive, and a willingness to take risks.
First Things:
Sam Hogg, the co-founder of GiftZip.com, exemplifies all these qualities. Hogg saw an opportunity to create a single place for people to shop for electronic gift cards, he risked his career by passing up alternatives to work on GiftZip.com full-time, and he’s now working hard to put GiftZip.com in a position to deliver a creative and useful service to its customers. However, ongoing firms can also behave entrepreneurially.
Second Things:
Typically, establish firms with an entrepreneurial emphasis are proactive, innovative, and risk-taking. For example, Apple Inc. is widely recognizing as a firm in which entrepreneurial behaviors are evident. Steve Jobs is at the heart of Apple’s entrepreneurial culture. With his ability to persuade and motivate others’ imaginations; Jobs continues to inspire Apple’s employees as they develop innovative products after an innovative product.
To consider the penetration Apple has with some of its innovations; think of how many of your friends own an iPhone, iPad, or Macintosh computer. Similarly, studying Facebook or Zynga’s ability to grow and succeed reveals; a history of entrepreneurial behavior at multiple levels within the firms. Also, many of the firm’s trade on the NASDAQ.
Such as Intuit, Amazon, Google, and Research In Motion are commonly thought of as entrepreneurial firms. The NASDAQ is the largest U.S. electronic stock market, with over 2,850 companies listed on the exchange. We want to note here that established firms with an orientation to acting entrepreneurially practice corporate entrepreneurship. Also, know about corporate entrepreneurship.
Extra Information:
All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. The position of a firm on this continuum is referring to as its entrepreneurial intensity. As we mentioned previously, entrepreneurial firms are typically proactive innovators and are not averse to taking calculated risks. In contrast, conservative firms take a more “wait and see” posture, are less innovative, and are risk-averse.
One of the most persuasive indications of entrepreneurship’s importance to an individual or a firm is the degree of effort undertaken to behave in an entrepreneurial manner. Firms with higher entrepreneurial intensity regularly look for ways to cut bureaucracy. For example, Virgin Group, the large British conglomerate, works hard to keep; its units small and instill in them an entrepreneurial spirit. Virgin is one of the most recognizing brands in Britain and is involving in businesses as diverse as airlines and music. In the following quote, Sir Richard Branson, the founder, and CEO of Virgin describes; how his company operates in an entrepreneurial manner:
Convention . . . dictates that “big is beautiful,” but every time one of our ventures gets too big we divide it up into smaller units. I go to the deputy managing director, the deputy sales director, and the deputy marketing director and say, “Congratulations. You’re now MD [managing director], sales director and marketing director of a new company.” Each time we’ve done this, the people involved haven’t had much more work to do, but necessarily they have a greater incentive to perform and a greater zeal for their work. The results for us have been terrific. By the time we sold Virgin Music; we had as many as 50 subsidiary record companies, and not one of them had more than 60 employees.
What is Entrepreneurship? Meaning and Definition. Also, the Image from the Internet.
Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. The ability of a manager to induce the subordinates to work with confidence and zeal. The potential to influence behavior of others. It is also define as the capacity to influence a group towards, the realization of a goal. Leaders are require to develop future visions, and to motivate the organizational members to want to achieve the visions.
Leaders: A Basic Definition
According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals.”
According to the idea of transformational leadership, more know about Leaders Explained by the Internet; an effective leader is a person who does the following:
Creates an inspiring vision of the future.
Motivates and inspires people to engage with that vision.
Manages delivery of the vision.
Coaches and builds a team, so that it is more effective at achieving the vision.
The action of leading a group of people or an organization, or the ability to do this.
The state or position of being a leader.
The leaders of an organization, country, etc.
Leadership brings together the skills needed to do these things. We’ll look at more detail.
The individuals who are the leaders in an organization regard collectively.
The activity of leading a group of people or an organization or the ability to do this.
The act of inspiring subordinates to perform and engage in achieving a goal.
Direction is both a research area and a practical skill encompassing the ability of an individual or organization to “lead” or guide other individuals, teams, or entire organizations. Leadership Explained by the Internet.
What is a Leadership? Leader is the ability of a company’s management to set and achieve challenging goals, take swift and decisive action, outperform the competition, and inspire others to perform well. It is tough to place a value on direction or other qualitative aspects of a company, compare to quantitative metrics that are commonly track and much easier to compare between companies. Individuals with strong leadership skills in the business world often rise to executive positions such as CEO, COO, CFO, president and chairman.
First, remembering What is an Organization? it is very helpful for understanding Theories of Organization “An organized group of people with a particular purpose, such as a business or government department.The action of organizing something, the quality of being systematic and efficient.The way in which the elements of a whole are arranged.”
Organization theory means the study of structure, functioning, and performance of an organization and the behavior of individuals and groups in it. 14 Principles of Management by Henri Fayol.
The Five type theories of Organization are: 1. Classical theory 2. Neo-classical theory 3. Modern theory 4. Motivation theory 5. Decision theory
Now, Explanation of each Theory following are;
Classical Theory
It was found by F.W.Taylor, father of scientific management.
This theory is base on the following four principles
Division of labor: The production of a commodity is divide into the maximum number of different divisions. The work of each division is look after by different persons. Each person is specialize in a particular work. In other words, the work is assign to a person according to his specialization and the interest he has in the work. The division of labor results in the maximum production or output with minimum expenses incurred and minimum capital employed.
Scalar and functional processes: The scalar process deals with the growth of organization vertically. The functional process deals with the growth of organization horizontally. The scalar principles refer to the existence of the relationship between superior and subordinate. In this way, the superior gives instructions or orders to subordinates of various levels of management and gets back the information from the subordinate regarding the operations carried out at different levels or stages. This information is used for the purpose of taking the decision or remedial action to achieve the main objectives of the business.
The scalar chain means the succession of domination by the superior on the subordinate from the top to the bottom of an organization. The line of authority is base on the principle of unity of command which means that each subordinate does work under one superior only. Reward Strategy with Developing System for Your Organization.
Structure: The organization structure may define as the prescribe patterns of work-related behavior of workers which result in the accomplishment of organizational objectives. Specialization and coordination are the main issues in the design of an organizational structure.
The span of control: It means an effective supervision of a maximum number of persons by a supervisor.
To summarize, classical theory emphasizes the unity of command and principle of coordination. Most of the manager’s time is wasted in coordination and control of the subordinates. According to Lyndall Urwick, “A superior can supervise a maximum of four members at higher levels and between 8-12 members at lower levels to constitute an ideal span of control.”
Characteristics of classical theory
It is base on the division of labor.
It’s base on objectives and tasks of the organization.
Concerns with the formal organization.
It’s base on the coordination of efforts.
Division of labor has to balance by unity of command.
It fixes a responsibility and accountability for work completion.
It is centralize.
Neo-classical Theory
It is developed to fill up gaps and deficiencies in the classical theory and is concerns with human relations movement. The study of an organization is base on human behavior such as how people behave and why they do so in a particular situation. The main contribution of this theory highlights the importance of the committee management and better communication. Further, this theory emphasizes that the workers should encourage and motivate to evince active participation in the production process. The feelings and sentiments of the workers should be taken into account and respect before any change is introduce in the organization. The classical theory was production oriented while neo-classical theory was people oriented.
Contributions of neo-classical theory
A person should the basis of an organization.
Organization should be view as a total unit.
Individual goals and organization goals should integrate.
Communication should move from bottom to top and from top to bottom.
People should allow to participate in fixing work standards and decision making.
The employee should given more power, responsibility, authority and control.
Members usually belong to formal and informal groups and interact with others within each group or sub-group.
The management should recognize the existence of the informal organization.
The members of sub-groups are attach with common objectives.
Modern Organization Theory
This theory is compose of the ideas of different approaches to management development. The approach is fully base on empirical research data and has an integrating nature. The approach reflects the formal and informal structure of the organization and due weight age is giving to the status and roles of personnel in an organization.
1. The modern theory studies the individuals in aggregates and the movement of individuals in and out of the system. 2. It studies the interaction of individuals with the environment found in the system. 3. It studies the interaction among individuals in the system.
Modern theories include the systems approach, the socio-technical approach, and the contingency or situational approach.
Systems approach: It considers the organization as a system composed of a set of inter-related and thus mutually dependent sub-systems, linking processes and goals.
Socio-technical approach: It considers the organization as composed of a social system, technical system, and its environment. These interact among themselves and it is necessary to balance them appropriately for the effective functioning of the organization.
Contingency or situational approach: It recognizes that organizational systems are inter-relate with their environment and that different environments require different organizational relationships for effective working of the organization.
The following are essentials of modern theory
It views the organizations as a whole.
It’s base on systems analysis.
The findings of this theory are base on empirical approach.
Integrating into nature.
Gives importance to inter-disciplinary approach to organizational analysis.
Concentrates on both quantitative and behavioral sciences.
It’s not a unified body of knowledge.
Motivation Theory
It is concerned with the study of work motivation of employees of the organization. The works are perform effectively if proper motivation is giving to the employees. The motivation may be in monetary as well as non-monetary terms, the inner talents of any person can identifies after giving adequate motivation to employees.
Decision Theory
This theory was giving by Herbert A. Simon who was award Nobel Prize in the year 1978 for it. He regarded organization as a structure of decision makers. The decisions was taking at all levels of the organization and important policy decisions was taking at higher levels of the organization. Simon suggest that the organizational structure is design through an examination of the points at which decisions must made and the persons from whom information is require if decisions should satisfactory.
Going by the previous year’s schedule, CAT will be conducted in the first week of December. That leaves roughly 4 or 5 months/150 days for preparation. CAT is the one stop solution for all such students who dream of getting an MBA degree from one of the best management institutes in India. To top it, CAT score is not just accepted by IIMs but by many other good B-schools. Though CAT is not deemed as a tough exam but is tricky to clear.
Students who have cleared the exam in the past, claim that the exam is not tough but requires careful and strategic planning in order to clear it. Here we will discuss what should be the preparation strategy for students who will begin preparing for CAT exam now.
Preparation of CAT Exams in 4 or 5 months
According to many experts and students who have cleared CAT earlier, this is the right time to prepare for CAT exam.
The first 2-3 months should be devoted to learning the basic concepts and brushing up the fundamentals of the topics. During this time, it would be a good practice to pick up mock tests and previous year question papers and begin solving them. In the beginning, the frequency of solving mock tests should be one to two in a week. This way, not only will you be able to analyze where you are in terms of your knowledge, you will also get to measure your progress as you go along with your preparation.
Contrary to popular opinion you do not need to study for 8-12 hours every day. Even 4-hour study duration is enough, given that you are focused and attentive toward what you study.
You will also need to categorize the topics to be covered as most difficult, difficult, moderate and easy. This will help you in a directed preparation and hone your strong topics and work harder on the weak ones.
Learn more than one method to solve a question. During the exam, knowing more than one way of solving a question will help you in solving questions more accurately. Accuracy is one of the key factors in scoring a high percentile in CAT exam.
While preparation makes sure that you pay equal attention to all the three sections. Sometimes students who are good in English, pay less attention to preparing for VRC section and end up scoring badly despite having a strong grasp on the language.
Make a routine and schedule for studying and stick to it. Incorporating CAT preparation in and as your daily schedule will help you stick to your goal and will deliver desired end result.
Toward the last phase of your preparation, do not start learning new topics. The last phase especially the weeks leading up to the exam day should be devoted to solving mock tests entirely. During this time you should be solving at least two mocks in a day.
Many Cat toppers swear by mock test solving and have said that solving mock tests helped them get in the right mind frame and solving CAT questions while sticking to the rules of the exam became second nature to them.
