Forms of Business Organizations in Industrial Management | New Topic [2024]

In this note, we are going to learn about Forms of Business Organizations. Welcome to Poly Notes Hub, a leading destination for engineering notes for diploma and degree engineering notes.

Author Name: Arun Paul.

Forms of Business Organizations

These four types of forms of business organizations –

1. Sole Proprietorship Business Organizations

A sole proprietorship is a business held by a single person. It is simple to set up and the least expensive of all types of ownership. The owner is subject to unlimited responsibility, which means that if the business cannot pay its creditors, they may go after the owner’s assets. Small businesses typically use the sole proprietorship form.

Benefits of Sole Proprietorship Types Business Organization:

1. Easy to Start/Dissolve
2. Full Control
3. Tax Benefits
4. Low Admin Costs
5. Keep All Profits
6. Personal Satisfaction
7. Privacy

2. Partnership Business Organizations

A partnership is a firm owned by two or more people who each contribute resources to the entity. The partners divide the business’s revenues among themselves. In a general partnership, all partners bear unlimited liability. In limited partnerships, creditors cannot seize the limited partners’ assets.

Benefits of Partnership Types Business Organization:

1. Shared Responsibility
2. Combined Skills and Expertise
3. More Capital Availability
4. Simple Formation
5. Pass-Through Taxation
6. Shared Decision-Making
7. Increased Business Opportunities

3. Corporation Business Organizations

A corporation is a business organization with a separate legal personality from its owners. Shares of stock represent ownership in a stock corporation. The owners (Stockholders) enjoy limited liability but have limited involvement in the company’s operations. The board of directors, an elected group from the stockholders, controls the activities of the corporation.

Benefits of Corporation Types Business Organization:

1. Limited Liability
2. Ability to Raise Capital
3. Perpetual Existence
4. Transferable Ownership
5. Enhanced Credibility
6. Tax Benefits
7. Professional Management

4. Cooperative Business Organizations

A cooperative is a business organization owned by a group of people and run for their mutual benefit. Members refer to the people who make up the group. Cooperatives might be incorporated or unincorporated. Cooperatives include water and electric utility cooperatives, cooperative banking, credit unions, and housing cooperatives.

Benefits of Cooperative Types Business Organization:

1. Democratic Control
2. Member Benefits
3. Limited Liability
4. Shared Resources
5. Tax Advantages
6. Perpetual Existence
7. Community Focus