Company Favoured as the Form of Business

By | December 1, 2019
Company Favoured as the Form of Business

Abstract

Business organizations are formed in many layers and in many types but, whether the company or joint-stock companies are the most favoured type of business organization. To have a look into what we need to explore and differentiate between the company and other forms.

From ancient times, we are having a Joint Hindu family concept, which is a business formed by the joint family. Then, there is a sole-proprietorship concept where there is a solely owned ownership of the individuals. Partnership firms where two minimum and maximum 10 and 20 in banking sector partners are required to run. A co-operative society is basically a body of government who not being the member of the society but at the time of need of capital, they come as a shield and is taken care of by state government.

Introduction

A company can be preferred as the best way to do business in today’s era, there are many reasons to it but only on the basis of comparative analysis between the company and others forms of business it could be easy to establish this fact.

As we all want to keep our personal business and assets away from getting it liable at the time of bankruptcy or loss.

And even everything is not perfect every time. There are some of the company’s disadvantages:

  • Cost-effective: it is costly when compared with other kinds of the organization but have you ever had a thought that it is your business which you are establishing for high profits and for it you even need a bit of risk of uncertainty to put it into your beneficial side.
  • More legal formality: there is more paperwork involved while the incorporation of Moa, and daily work on the basis of making good standing.

Similarly, advantages for the same are:

  • Corporate personality: A company is in itself is an artificial person or separate legal entity of its own company and will stand liable when sued by other body and can also sue.
  • Perpetual Succession: they are born out of the law, so they will exist till the company is not dissolved in itself and will exist even if any of its board of member has retired, expired, or went bankrupt.
  • Common Seal: as the company is a separate legal entity so it needs a sign or seal to get recognized as the company’s approval. As day to day, there are many decisions made by the board and resolution are passed such document can’t be passed without the seal of the company.
  • Limited liability: the shareholders have limited liability here as they have equal rights and if the shares are fully paid then they have no liability.

Comparative Analysis

Here we will be comparing all the forms of business organization with the help of features of each form with all the organizations which they deal in:

  1. Liability

When we see the word liability a simple thing gets to our mind and that is whether it is limited or unlimited. Whether our asset will also be a part of the asset of the company. But the fact is no, in case of the company it is not so. We have limited liability when compared to other forms of business forms. Partnership and sole proprietorship have completed unlimited liability.

Since an incorporated business stands as an individual entity.

  1. Establishment

Agreed with the point that the company takes many regulations to be fulfilled and that can lengthy in time and equally effective in cost and in comparison, all other forms are less cost-effective and lengthy paperwork.

  1. Structure

When it comes to structure, then sole proprietorship will stand by one sole person and will not be incorporated by more than him where decision making and other all opportunities are his tasks, even the risk shares. When we talk about partnership it consists of 2 to 10 members in general. And cooperative can have members as many up to 50 candidates. But in the case of a company it has again more aspects as there are directors appointed, shareholders hold shares and with the help of these bodies the decision is been taken.

  1. Continuity

Again, here at first let’s talk about other forms of business, so in every kind of business the possibility of continuation of a firm or solely owned business has less expectancy of staying active in the market. As these, dissolves with the retirement or bankruptcy or when any member of the firm or happens with the sole owner then in such case there will complete dissolution of the business.

Whereas, in the case of the company there is no limit to continuity. Which means theses are perpetual successions or separate legal entity of the company.

  1. Asset protection

Here, with this we want to explain that once an asset is been incorporated by the company its reliability and validity exists. They hold a perpetual existence or can say separate legal entity. Whereas, in case of other form of business it is completely opposite. As we need protection of our asset which is not assured in case of partnership sole-proprietorship

  1. Unlimited life:

Most business forms have a limit and get dissolves after that. But I case of the company its not true as it always stays in the market even if the members of the company are not together the existence of the company is not hampered. In the case of the company, there is no limit to continuity. Which means theses are perpetual successions or separate legal entity of the company.

  1. Credibility:

Shaping a company adds believability to your business. Customers and clients of your business may look on your company status more well than different types of business.

Joining your business may motion toward your customers that no doubt about it “here now gone again later” activity. Joining your business includes a demeanour of demonstrable skill and makes your organization look at increasingly genuine without flinching of numerous customers and clients.

Conclusion

This paper dealt with different business models which can help us choose the perfect form of business which we want to carry ahead and will also be useful for researchers and students to get knowledge and prosper it in future ideas.


  1. Overview of the Companies Act, 2013
  2. Different Stakeholders in a Company and their Interests

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