Group 2 Major Form of Business: Sole Proprietorship Partnership Corperation Other Cooperative Franchising

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Bismillah Sole Proprietorship Definition Business owned and operated by one individual A sole proprietor must set up their business by themselves. They are fully responsible for all liabilit y and obligation. Advantages Quick decision making A sole proprietor enjoys considerable degree of freedom in making business decis ion. Further the decision making is prompt because there is no need to consult o thers. This way lead to timely capitalization of market opportunities as and whe n they arise Confidentiality of information Sole decision making authority enables the proprietor to keep all the informatio n related to business operations confidential and maintain secrecy. A sole trade r is also not bound by law to publish firm account Direct incentive A sole proprietor directly reaps the benefit of his/her effort as he/she is the sole recipient of the all profit. The need to share profits does not arise as he /she is the single owner. This provides maximum incentive to the sole trader to work hard Ease of formation & closure An important merit of sole proprietorship is the possibility of siness with minimal legal formalities. There is no separate law e proprietorship. As sole proprietorship is the least regulated , it is easy to start and close the business as per wish of the entering into bu that governs sol form of business owner

Disadvantages Unlimited liability A sole proprietor is personally liable for all debts in incurred by the business . If it fails to generate enough cash, bills must be paid out of the owner s pocket Lack of continuity A sole proprietorship legally dissolves when the owner dies. Although the busine ss can be reorganized by the successor, executors or heirs must otherwise sells its assets A sole proprietorship depends on the resources of one person whose managerial an d financial limitations may constrain the business A sole proprietors often find it hard to borrow money to start up or expand. Man y bankers fear that they won t be able to recover loans if owners become disabled or insolvent Example Local restaurant, local construction firm, a barber shop, a laundry serv ice, a local clothing store

Partnership Definition Business with two or more owners (limit 20 persons) who share in both the operation of the firm and the financial responsibility for its debts. Advantages Lower taxes Profit and losses flow directly to the partners and are taxed at individual rate s. Partners share income and losses equally unless the partnership agreement spe cifies otherwise Ability to grow by adding new talent and money The diversity of skills that good partners and money bring to an organization le ads to innovation in product and company Partnerships are easy to form A partnership is just two or more (limit 20 persons) working together Disadvantages Unlimited liability is the greatest drawback If one of the general firm s partners makes a serious business or professional mista ke and is sued by a disgruntled client, all general partners are financially acc ountable The potential for interpersonal problems Difficulties often arise because each partner wants to be responsible for managi ng the organization

The partnership may have to face the question of what to do with unproductive pa rtners If a partner wants to leave the firm, conflicts can arise over claims on the fir m s profits and on capital the partner invested Example John and Peter Holdings, Mona & Noni Flower, Rahmat & Co.

Corperation Definition A corperation is a legal personality, usually used to conduct busines s and also exist as a product of corporates law hences their rules balances the interests of the shareholders that invest their capital. It also have becomes an increasingly dominant part of economic life in modern times. Types of Corperati ons Private Limited o This company established under Company Act 1965 and at least two persons as re quired sponsor it. This members of the company limit to 50 people only in single s time. One private limited company has features as a man namely have names him own, may sue or on claimed his name personally in court, have the address that p articular, have over asset his name own Public Limited o Public limited company is also under Company Act 1965 and have a same feature as private limited. Once Private Limited company who have been successful and wa nt increase his members that is over from 50 people can change to Public Limited . The member of public limited company is infinity but must have at least seven member Advantages Limited liability One of the key reasons for forming a corporation is the limited liability protec tion provided to its owners. Because a corporation is considered a separate lega l entity, the shareholders have limited liability for the

corporation's debts. The personal assets of shareholders are not at risk for sat isfying corporate debts or liabilities Freely Transferable Shares Shares of corp orations are generally freely transferable because as a separate entity, the exi stence of a corporation is not dependent upon who the owners or investors are at any one time. A corporation continues to exist as a separate entity and is not terminated or dissolved even when shareholders dies or sell their shares. Shares of corporations are freely transferable unless shareholders have "buy-sell" agr eements limiting when and to whom shares may be sold or transferred. Also, secur ities laws may restrict the transferability of shares Disadvantages Fees It costs money to incorporate. There are typically four types of fees, including : a fee to file the articles of incorporation with the secretary of state; a fir st year franchise tax prepayment; fees for various governmental filings; and att orney fees. But every year tens of thousands of businesses choose to incorporate online without the use of an attorney Example Private limited Minyak Afiat Sdn Bhd Public limited Tenaga Nasional Berhad

Other Cooperative Definition A business owned and controlled equally by the people who use its ser vices or who work at it Advantages More idea Low tax Easy to attract employee Di sadvantages Unlimited liability Easy to misunderstanding Example Co-operative Co nsumer

Franchising Definition An arrangement whereby a business owner allows others to use its trad emarks, trade name, or copyright under specific condition Types of Franchises Pr oduct franchise Give you the right to sell trademarked goods which are purchased from the franch isor and resold (example: car dealer) Manufacturing franchise Give you the right to produce and distribute the manufacturer ft drink bottling plant) Business format franchise Give you the right to using franchisor : fast food chain) s product (example: so

s name and format for doing business (example

Advantages Name recognition many franchaisees are nationally known because of advertising by the franchisor Starting up a new business quickly based on a proven trademarks and formula of doing business Financial support from franchisor which can ensure sufficient start-up funds for the franchisee

Disadvantages Lost of controls franchisee is required to follow the system and get approval for changes from th e franchisor High cost is needed The cost for starting up franchising business is high Hard competition with others franchising industry will get rivalry intense from the rest of person who involv e the same franchising business Example KFC, Mc D, Seven Eleven

Alhamdulillah A work by: Imran (L) Fared Azrul Naim Lina Syidah