हिंदी
CISCEISC (Commerce) Class 12
प्रश्न पत्र३७९
पाठ्यपुस्तक उत्तर१८२१७
महत्वपूर्ण प्रश्न एवं उत्तर६२४१
अवधारणा स्पष्टीकरण और वीडियो६३६
समय सारणी१६
पाठ्यक्रम

Overview of Various Business Entities

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Estimated time: 38 minutes
CISCE: Class 12

Definition: Sole Proprietorship

  • The individual proprietorship is the form of business organisation at the head of which stands an individual as one who is responsible, who directs its operations and who alone runs the risk of failure. - L. H. Haney
  • A sole proprietor is a person who carries on business exclusively by and for himself. He is not only the owner of the capital of the undertaking, but is usually the organiser and manager and takes all the profits or responsibility for losses. - James Stephenson
  • Sole trader business is a type of business unit where one person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the management of business. - J. L. Hansen
  • Under the sole proprietorship form of ownership, a single individual organises and operates the business in his own name. He is not only responsible for its management but also for risks. - J. M. Shubin
  • Sole proprietorship is a form of business where the individual proprietorship is the supreme judge of all matters pertaining to his business. - Kimball and Kimball
  • Sole proprietorship is an informal type of business owned by one person. - J. L. Lundy
  • The sole proprietorship is that form of business ownership which is owned and controlled by a single individual. He receives all the profits and risks all of his property in the success or failure of the enterprise. - B. O. Wheeler
CISCE: Class 12

Key Points: Sole Proprietorship

  • Sole proprietorship is a form of business owned, managed, and controlled by one individual who receives all profits and bears all risks.
  • There is no separate legal entity; the owner and the business are considered the same in the eyes of law.
  • The proprietor has full control over decision-making and business operations.
  • The business is usually small in size due to limited capital and managerial capacity of one person.
  • The proprietor has unlimited liability, meaning personal assets may be used to pay business debts.
  • It is easy to form and close, as very few legal formalities are required.
  • The business lacks continuity because death, insolvency, or incapacity of the owner directly affects the business.
CISCE: Class 12

Definition: Partnership

  • Partnership is the relation existing between persons competent to make contract, who agree to carry on a lawful business in common with a view to private gain. - L. H. Haney
  • A partnership or firm as it is often called is, then a group of men who have joined capital services for the prosecuting of some enterprise. - Kimball
  • Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all. - The Partnership Act
  • A Partnership is a form of business organisation in which two or more persons upto a maximum twenty join together to undertake some form of business activity. - J.L. Hanson
  • Two or more individuals may form a partnership by making a written or oral agreement that they will jointly assume full responsibility for the conduct of business. - John Shubin
CISCE: Class 12

Key Points: Partnership

  • Partnership is a form of business where two or more persons agree to carry on a lawful business and share its profits and losses.
  • It is created by an agreement (written or oral), usually recorded in a partnership deed which states rights, duties, and profit-sharing ratio.
  • The business must be legal and carried on with the objective of earning profit.
  • The relationship among partners is contractual, and only persons competent to contract can become partners.
  • Every partner acts as both a principal and an agent, meaning each partner can bind the firm and other partners through his actions.
  • The minimum number of partners is two and the maximum number is fifty (as per law).
 
CISCE: Class 12

Difference Between Partnership and Sole Partnership

Basis Partnership Sole Proprietorship
Governed by Governed by Partnership Act, 1932 No separate Act governs it
Number of formation Minimum 2, Maximum 50 Only one owner
Risk Partners jointly bear the risk Only proprietor bears all risks
Basis of formation Formed by partnership deed No agreement required
Decision making All partners are consulted; decisions may be delayed Quick decision; no need to consult anyone
Finance Larger capital as all partners contribute Limited capital from one person
Division of profit Profit divided among partners Entire profit goes to proprietor
CISCE: Class 12

Key Points: Private Limited Company

  • A private limited company is a company with a minimum of two members and limited liability of its shareholders.
  • The liability of each member is limited to the face value of shares held by him/her.
  • It restricts the transfer of shares and limits the maximum number of members to 200.
  • It cannot invite the public to subscribe for shares, debentures, or deposits.
  • The company must use the word “Private” in its name and enjoys certain privileges under the Companies Act.
CISCE: Class 12

Key Points: Public Limited Company

  • A public limited company is a company that is not a private company and requires a minimum of seven members, with no maximum limit.
  • It does not restrict the transfer of shares and allows free transfer of securities.
  • It can invite the general public to subscribe to its shares, debentures, and accept deposits.
  • The liability of members is limited to the unpaid amount on shares held by them.
  • A private company that is a subsidiary of a public company is also treated as a public company.
CISCE: Class 12

Difference between Private Company and Public Company

Point of Difference Private Company Public Company
Number of members Minimum 2, Maximum 200 Minimum 7, No maximum limit
No. of directors Minimum 2 directors Minimum 3 directors
Prospectus Not required to issue Must issue prospectus or statement in lieu
Invitation to general public Cannot invite public Can invite public
Transfer of Shares Transfer restricted Free transfer allowed
Statutory meeting and report Not compulsory Compulsory
Index of members Not compulsory Compulsory
Legal formalities Fewer legal formalities More legal formalities
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