Business Organization

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     A business organization is any form of establishment that undertakes the production of goods or rendering of services demanded by the consumers. The primary objectives of any business or organization are to make a profit.

 Types of Business Organizations
Business organizations can be classified into two major types. These are private enterprises and public enterprises.
 Private enterprises
A private enterprise is a business organization in which all forms of property are privately owned by individuals or organizations, whose primary objective is profit-making.
Private enterprises comprise the sole proprietorship, the partnership, private limited company, Joint-stock company, and co-operatives. 
   Sole proprietorship
      This is a one-man business organization. It is the simplest unit of business organization though usually not the smallest in all respects. It features prominently in the trades, occupations, agriculture, and small scale industrial establishments. The proprietor often provides the capital, organizes the business, bears its risks, and hence enjoys all profits accruing from its
successful management.
Its characteristics features are:
(i) Ownership and control -the single proprietor
owns the business and also controls it.
(ii) Risk bearing the proprietor bears the risks of
the business alone.
(iii) Capital – business capital is provided by only one man.
(iv) Liability the sole proprietor’s liability is
unlimited.
(v) Profit – all profits from the business are
enjoyed by the sole proprietor.

Its advantages as a form of business organization
are:
(i) It comes into existence easily because initial capital can be raised conveniently by the proprietor.
(ii) It ensures prompt decision making and implementation.
(iii) It makes the rendering of personal services possible and advantageous.
(iv) Personal control is usually effective and often guarantees business success. 
(v) Net business profits accrue to the sole
proprietor.
(vi) Double taxation does not affect this form of
business organization.

Its disadvantages are as follows:
(i) Limited capital- the small size of the capital often makes expansion very difficult.
(ii) Lack of continuity- the sole proprietor’s death or retirement may lead to the collapse of the business.
(iii) Unlimited liability-the sole proprietor’s
liability is not limited to his capital outlay only.
(iv) Limited internal economies of scale the business does not enjoy as many internal economies as limited liability firms.
(v) The proprietor often works long hours and does
not go on leave.
   Partnership
       A partnership exists when two to twenty persons having similar economic interests come together to set up a business purposely to make profits. This form of business organization is very common e.g. most of the accounting firms in Nigeria are in the form of partnership e.g. Akintola Williams& Co.

Its characteristic features are as follows:
(i) It can be formed by more than one but not more than twenty persons.
(ii) The risks of the business are jointly borne by all
the partners except for the dormant partner.
(iii) The liability of all partners except the dormant
partner is unlimited.
(iv) It affords a wider scope of business decision
making

Its advantages as a form of business organization
are:
(i)It can obtain more capital than a sole proprietor.
(ii) There is a close relationship between partners and their workers and customers.
(iii) Privacy – Its accounts are not open to public inspection.
(iv) Decisions are jointly taken by the partners.
(v) There is specialization in business management as the business is formed by two or more persons.
(vi) There is also a wider spread of business risks.
Its disadvantages are as follows;
(i) Unlimited liability- the liability of partners in
the business is unlimited.
(ii) The death of a member may bring about the end
of the business.
(iii) Any dispute among members may lead to the end of the business.
(iv) The possibility of a disagreement over the introduction of a new partner may deny the business more capital and expertise.
(v)Limited capital resources due to its inability to raise funds through the Stock Exchange.
Private limited company
This is a form of business organization that is privately owned by a minimum of two and a maximum of fifty members. By its nature of existence, it cannot offer its shares to the public for subscription. Examples of this type of business organization include the Heinemann Education
Books (Nig.) Limited, Gee Kay Bee (Nigeria) Limited.
 Private limited company
This is a form of business organization that is privately owned by a minimum of two and a maximum of fifty members.. By its nature of existence, it cannot offer its shares to the public for
subscription. Examples of this type of business organization include the Heinemann Education Books (Nig.) Limited, Gee Kay Bee (Nigeria) Limited.

Its characteristic features are:
(i) It should have a minimum of two and a maximum of fifty members in Nigeria.
(ii)It is restricted from transferring its shares from one person to another.
(iii) It is not permitted to raise capital by public subscription.
(iv) It is not obliged to publicize its balance sheet
annually.

its advantages as a form of business organization
are:
(i) Close relationship among members assures successful business enterprise.
(ii) It is capable of raising large capital through the pooling of resources of members.
(iii) It can protect itself from undue publicity.
(iv) It is not compelled to publish its annual balance
sheet.
(v) Liabilities of members are limited to their financial contributions to the running of the business.
Its disadvantages are as follows:
(i) Limited capital due to the restriction of membership to a maximum of fifty.
(ii) Transfer of shares is subject to the concurrent approval of all members.
(iii) It can not raise capital through public subscription.
(iv) It is subject to double taxation.
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