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Business functions Essay Example

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Business functions

Business the liability of the sole proprietor is unlimited as compared to the private limited company where the liability is limited to the number of shares held by them. The limited company is registered by the company’s house and it also includes various legal documents which is included in the memorandum of association. In case of the private limited company the director of the business is required to prepare annual account. The private limited business can be a family based business or it can be a large business.The public limited company has shares similar as in case of the private limited company. The difference that exists in case of the public and the private limited company is in case of the public limited company the shares are freely traded on the stock exchange. Therefore the ownership is easily available for everyone who wants to buy the shares. The requirements for the public limited company are that there must be two directors and a qualified company secretary.When analyzing a business the main question that originates is who is the owner of the business. There may be different kinds of ownership of a business and each type of ownership has its peculiar characteristics. Three main types of business based on the ownership are Sole proprietorship, Private limited and Public limited.In sole proprietorship form of business ownership a business is owned and started by a single person. Such a type of ownership is found only in certain businesses which involve low capital investments and are less risky. In this kind of business all the liabilities are taken up by a single person. This means that in case of a default of the company on its loan obligation the proprietor himself is liable to be sued on behalf of the company for the entire default amount. Since the entire burden of loan is borne by a single person the creditors normally exert extra bit of cautiousness in giving loans to such types of businesses. Example of sole proprietorship business may be found in certain small companies such as a small cloth store owned by a single individual. The owning of the small business by the single individual will mean that the single individual will have to manage for all the capital required for the business. In case of crunch times or recession this will result in a big problem for the sole proprietor as he will find it extremely difficult to gather fund.Unlike sole proprietorship which is owned by a single individual who has unlimited

References

Emmanuel, M. 2010. Methodology of business studies. New Delhi: Pearson Education India.
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preview essay on Business functions
  • Pages: 6 (1500 words)
  • Document Type: Essay
  • Subject: Business
  • Level: Undergraduate
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