Law and You > Corporate Laws > Companies Act, 2013 > Forms of Business Organizations

When starting a business or is interested in expanding an existing one, an important decision relates to the choice of the form of organization. By weighing the advantages and disadvantages of each form of organization, the most appropriate form is determined. The decision of selection also depends on the form which satisfies the need of the entrepreneur. Various forms of business organizations from which one can choose the right one include:

• Sole proprietorship,
• Joint Hindu family business,
• Cooperative societies
• Partnership
• Joint-stock company.

Sole Proprietorship:

It is a form of business organization which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks. This form of business is particularly common in areas of personalized services such as beauty parlours, hair saloons and a retail shop in a locality.

• Less Legal Formalities: It has less legal formalities. It is the form of business organization which does not have a separate law to govern it. It does not require incorporation or registration of any kind. In most of the cases, only a license is required to carry out the desired business. In the absence of any legal provision, it is easy to close down also.
• Unlimited Liabilities: There is no separation between the owner and the business, hence the liabilities of the owner are unlimited. If the business fails to meet its own liabilities, the burden of liabilities falls upon the proprietor to pay them through his personal assets.
• Ease of Management: The owner can make all decisions and carry out his plans without any interference from others.
• Sole Risk Bearer and Profit Recipient: As the owner is investing money and responsible for everyday management of the business, he is the only risk bearer (in case of losses) and profit recipient (in case of profit).
• No Separate Identity: As the business and owner are one and the same, there is no separate identity of the sole proprietorship.
• Continuity of Business: As the owner is responsible for all the activities of the business, the death, retirement, bankruptcy, insanity, imprisonment, etc. will have an effect on the sole proprietorship.
• Maintenance of Secrecy: The owner is not bound by law to publish his business accounts. It enables him to keep all the information related to business operations confidential and maintain secrecy.

Merits of Sole Proprietorship:

• Quick Decision Making: As the owner is the sole decision-maker in the business, he will have complete control of the entire business, this will facilitate quick decisions and freedom to do business according to his wishes. He is only one who is the risk bearer and the profit recipient. This provides a maximum incentive to the sole trader to work hard.
• Ease of Formation and a Closure: This form of business has less legal formalities. It is the form of business organization which does not have a separate law to govern it. It does not require incorporation or registration of any kind. In most of the cases, only a license is required to carry out the desired business. In the absence of any legal provision, it is easy to start and close down also.
• Confidentiality of Information: In this form of business organization there is no separate law to govern it. Thus the owner is not bound by law to publish business’s accounts or any such documents to any members of the public. Thus it enables the owner to keep all the information related to business operations confidential and maintain secrecy which is sometimes important in the business.
• Direct Incentive: The owner derives the maximum incentive from the business. The owner directly reaps the benefits of his efforts as he is the sole recipient of all the profit. So the work he puts into the business is completely reciprocated in incentives. This reciprocality provides a maximum incentive to the sole trader to work hard.
• Sense of Accomplishment: Here the owner is his own boss. Hence there is personal satisfaction and sense of achievement involved in working for oneself. He need not answer anybody because he is answerable to himself. The knowledge that one is responsible for the success. It boosts self-worth and self-respect for the owner.

Demerits of Sole Proprietorship:

• Unlimited liability: One of the biggest limitations of a sole proprietorship is that the owner has unlimited liability. If the business fails, the creditors can recover their dues not merely from the business assets, but also from the personal assets of the proprietor. Thus if the business fails it can wipe out the personal wealth of the owner. A wrong decision or in unforeseen unfavorable circumstance can create a serious financial problem for the sole proprietor. Hence a sole proprietor is less inclined to take risks in the form of innovation or expansion.
• Limited Resources: Resources of a sole proprietor are limited to his personal savings and borrowings from friends and relatives. Thus the capital for the business is limited. Less capital is available for diversification and expansion of the business. Lack of resources is one of the major reasons why the size of the business rarely grows much and generally remains small. Banks and financial institutions are reluctant in lending to proprietorship firms.
• Limited Life of a Business: The life cycle of a sole proprietorship firm is undecided and attached to its owner.  As the owner is responsible for all the activities of the business, the death, retirement, bankruptcy, insanity, imprisonment, etc. will have an effect on the sole proprietorship and can lead to the closure of the business.
• Limited Managerial Ability: A sole proprietor is taking all the decisions in the business and has to perform the responsibility of varied managerial tasks such as planning, purchasing, selling, financing, etc..  He cannot be an expert in all the fields of the business. Due to limited resources, he cannot hire and retain competent and talented people to help him out. This may lead to the business suffering from mismanagement and poor decisions.

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Joint Hindu family business:

Joint Hindu family business is the oldest and specific form of business organization found only in India. It refers to a form of organization wherein the business is owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed by the Hindu Law, which is one of the several religious laws (personal laws) prevalent in India. The firm is created by the operation of law. It does not have any separate and distinct legal entity from that of its members. When two or more families agree to live and work together, throw their resources and labour with joint-stock and share profits and the losses together, then this family is known as composite family.

The basis of membership in the business is birth in a particular family. Any person born into the family (boy or girl) up to the next coming three successive generations can be members of the business. The business is controlled by the head of the family who is the eldest member and is called karta or ‘Manager’. Karta is the main person responsible for business and finances. All members have equal ownership right over the property of an ancestor and they are known as co-parceners.

Features of Joint Hindu family business:

• Formation: For a joint Hindu family business, there should be at least two members in the family. There must be some assets, business or ancestral property that they have inherited or will eventually inherit. The HUF business does not require any agreement or documentation as membership is by birth. It is governed by the Hindu Succession Act, 1956.
• Liability: The liability of all members except the karta is limited to their share of the co-coparcenary property of the business. Thus their liability is limited. The karta, being the head of the family, however, has unlimited liability. Thus the Karta is not only liable to the extent of his share in the business but his separate property is equally attachable and amount of debt can be recovered from his separate property.
• Control: The control of the family business lies with the karta. He takes all the decisions and is authorized to manage the business. His decisions are binding on the other members. He may choose to confer with the co-parceners about various decisions, but his decision can be independent. His actions will be final and also legally binding. The members of the family have full faith and confidence in Karta. Only Karta is entitled to deal with outsiders. But other members can deal with outsiders only with the permission of Karta. Only Karta has the implied authority to contract debts and pledge the credit and property of the firm for the ordinary purpose of the businesses of the firm.
• Continuity: The HUF business can be continued perpetually.  The business continues even after the death, lunacy or insolvency of the karta or any other member, as the next eldest member takes up the position of karta, leaving the business stable. The business can, however, be terminated (dissolved) with the mutual consent of all the members.  Any single member has no right to get the business dissolved.
• Minor Members: The inclusion of an individual into the business occurs due to birth in a Hindu Undivided Family. Hence, minors can also be members of the business. But they will enjoy only the benefits of the organization.

Merits of Joint Hindu Family Business:

• Easy to Start: It is very easy to start the Joint Hindu Family Business. No legal formalities are required to be faced, such as registration. It requires no agreement.
• Effective control and Prompt Decision Making:
• Like any other organization, there is scope for disagreements and conflicts. But since the karta has absolute decision making power. it will lead to prompt, flexible and effective decision making. The. This avoids conflicts among members as no member can interfere with his right of karta to take a decision. The prompt decisions help the business to grab opportunities.
• Secrecy: In Joint Hindu Family Business, all the decisions are taken by the ‘Karta’ himself. He is in a position to keep all the affairs to himself and maintains perfect secrecy in all matters.
• Continuity: The HUF business can be continued perpetually.  The death, lunacy or insolvency of the karta or any member will not affect the business as the next eldest member will then take up the position. Hence, operations are not terminated and continuity of business is not threatened.
• Limited Liability of Members:
• The liability of all the co-parceners except the karta is limited to their share in the business, and consequently, their risk is well-defined and precise. This keeps the balance between power and responsibility.
• Freedom Regarding Selection of Business: The Karta is at freedom to select any business of his choice. He has not to depend on others.
• Increased Loyalty and Cooperation: Since the business is run by the members are relatives and members of the same family, there is a greater sense of loyalty and cooperation towards one other. Pride in the growth of the business is linked to the achievements of the family. The trust among members is also there and leads to overall cooperation.

Demerits of Joint Hindu Family Business:

• Limited Resources: The capital is limited only up to the resources of one family. No outside members other than family members can be introduced to the HUF.  Thus the joint Hindu family business faces the problem of limited capital as it depends mainly on ancestral property. This limits the scope for expansion of the business. The Karta cannot take advantage of economies of large size due to limited finance.
• Unlimited Liability of Karta: The karta has power but he is burdened not only with the responsibility of decision making and management of the business, but also suffers from the disadvantage of having unlimited liability. His personal property can be used to repay business debts. This may make him overly cautious and timid in his business dealings. Another factor is that he may even be held responsible for the actions of other members.
• Dominance of Karta: The karta individually manages the business and takes all the decisions which may at times not be acceptable to other members. This may cause conflict amongst them and may even lead to breaking down of the family unit.
• Limited Managerial Skills: The position of karta is given to the senior-most family member, whether he is the most qualified or not is not taken into consideration. Since the karta cannot be an expert in all areas of management and he may not be able to perform all managerial functions because of the limitation of time and energy. the business may suffer as a result of his unwise decisions. His inability to decide effectively may result in poor profits or even losses for the organization. Due to the limited scale of operations and financial resources, it may not be feasible for HUF to secure the services of experts in different fields like purchasing, production, and marketing.
• Misuse of Power: The karta is the only decision-maker of such organization. No other member can interfere in his management. This may lead to the misuse of power and the Karta may use the power for his personal interest.

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Cooperative Societies:

Cooperation is the process of groups of individuals working or acting together for common, mutual, or some underlying benefit or purpose, as opposed to working in competition for selfish benefit. The cooperative society is a voluntary association of persons, who join together with the motive of the welfare of the members. The aim of a cooperative society is to protect the economic interests of members in the face of possible exploitation at the hands of middlemen obsessed with the desire to earn greater profits. The working of a cooperative society is governed by the Cooperative Societies Act, 1912.

Features of Cooperative Society:

• Easy Formation: The process of setting up a cooperative society is simple.  A voluntary consent of at least ten adult persons is required to form a cooperative society. The capital of a society is raised from its members through the issue of shares. The society acquires a distinct legal identity after its registration. Document required for registration of a cooperative society is easy to compile and comply.
• Voluntary Membership: This is the first cardinal principle of co-operation. The cooperative society itself is a voluntary association, hence the membership of a cooperative society is voluntary. A person is free to join a cooperative society, and can also leave anytime as per his desire. There cannot be any compulsion for him to join or quit a society. As per the procedure, a member is required to serve a notice before leaving the society, there is no compulsion to remain a member. Membership is open to all, irrespective of their religion, caste, and gender. On leaving the society, shares are not transferable to other persons, although they are automatically transmitted to heirs on the death of a member. The right of membership, however, is not absolute. This can be denied if it is likely to be prejudicial to the interests or the existence of society. Similarly, any member can be expelled by the managing committee for similar reasons, and this will not be considered a breach of the principle of open membership.
• Legal Status: The setting up and working of a cooperative society is governed by the Cooperative Societies Act, 1912. Registration of a cooperative society is compulsory. Hence a cooperative society has a separate identity and it is distinct from its members. Due to separate identity, the society can enter into contracts and hold property in its name, sue and be sued by others. Similarly, it is not affected by the entry or exit of its members.
• Finances: The finances of a cooperative society are contributed by members through the purchase of shares. Generally, cooperative societies are formed by the weaker and poorer sections of the society, their capital collections are meager. The government also lends financial support in the form of loans from the State and Central Co-operative Banks under some schemes.
• Limited Liability: The liability of the members of a cooperative society is limited to the extent of the amount contributed by them as capital. This defines the maximum risk that a member can be asked to bear.
• Control: Co-operation is democracy in action.  In a cooperative society, the power to take decisions lies in the hands of an elected managing committee. Since most of the co-operatives operate on a local scale, the meetings of the members are well attended, and this puts the managing committee under a lot of close supervision.  The right to vote, the concept of one man one vote and no proxies at the time of election give the members a chance to choose the members who will constitute the managing committee and this lends the cooperative society a democratic character. Again, to strengthen democracy, some issues are not decided by a bare majority alone, but by two- thirds or three-fourths majority. Regular training programs and frequent meetings of all members, managing committee, and subcommittees are conducted so that the maximum number of members is to be associated.
• Service Motive: The main objectives of the formation of a cooperative society are mutual help and welfare and not of maximizing profit. This motive of service dominates its working and provide useful services like credit, consumption goods, or input resources to its members and society. If any surplus is generated as a result of its operations, it is distributed amongst the members as a dividend in conformity with the bye-laws of the society.
• Education and Training: Many cooperative societies arrange education and training programs for its members with the purpose of developing co-operation into a well-organized movement.

Merits of Cooperative Society:

• Easy Formation: The process of setting up a cooperative society is simple compared to the formation of a company.  A voluntary consent of at least ten adult persons is required to form a cooperative society. The capital of a society is raised from its members through the issue of shares. The society acquires a distinct legal identity after its registration. Document required for registration of a cooperative society is easy to compile and comply. Similarly, it does not involve long and complicated legal formalities.
• Equality in Voting Status: The principles of ‘right to vote’ and ‘one man one vote’ govern the cooperative society. Irrespective of the amount of capital contribution by a member, each member is entitled to equal voting rights. This gives a democratic nature to the cooperative society.
• Limited liability: The liability of members of a cooperative society is limited to the extent of their capital contribution. The personal assets of the members are, therefore, safe from being used to repay business debts. This defines the maximum risk that a member can be asked to bear.
• Stable Existence: As a cooperative society has a separate identity, it is not affected by the entry or exit of its members. Death, bankruptcy or insanity of the members do not affect the continuity of a cooperative society. A society, therefore, operates unaffected by any change in the membership. Thus cooperative society has perpetual existence.
• Economy in Operations: The members generally offer honorary services to the society. As the focus is on the elimination of middlemen, this helps in reducing costs. The customers or producers themselves are members of the society, and hence the risk of bad debts is lower.
• Tax Advantage: Unlike other forms of business ownership, a co­operative society is exempted from income-tax and surcharge on its earnings up to a certain limit. Besides, it is also exempted from stamp duty and registration fee.
• Government Assistance: Cooperation is an effective tool of socio-economic change and it exemplifies the idea of democracy. Hence, the Government offers a number of grants, loans and financial assistance to the cooperative societies to make their working more effective.

Demerits of Cooperative Society:

• Limited Resources: The finances of a cooperative society are contributed by members through the purchase of shares. Generally, cooperative societies are formed by the weaker and poorer sections of the society, their capital collections are meager. Therefore the funds available with the co-operatives are limited. The low rate of dividend offered on investment and one man one vote principle act as a deterrent in attracting membership or more capital from the members. Therefore the funds available with the co-operatives are limited.
• Inefficiency in Management: Co-operative societies are managed by the managing committee elected by its members. The members of the managing committee who offer honorary services may not have the required qualification, skill or experience.  They may not able to give time to the organization. Cooperative societies are unable to attract and employ expert managers because of their inability to pay them high salaries. The lack of managerial skill results in inefficient management, poor functioning and difficulty in achieving objectives.
• Lack of Secrecy: A cooperative society has to submit its annual reports and accounts with the Registrar of Cooperative Societies.  Similarly, open discussions in the meetings of members as well as disclosure obligations as per the Societies Act (7), it is difficult to maintain secrecy about the operations of a cooperative society.
• Government Control: Co-operative societies are subject to excessive government regulation which affects their autonomy and flexibility. In return of the privileges offered by the government, cooperative societies have to comply with several rules and regulations related to auditing of accounts, submission of accounts, etc. Interference in the functioning of the cooperative organization through the control exercised by the state cooperative departments also negatively affects its freedom of operation. Adhering to various regulations takes up much of the management’s time and effort.
• Differences of Opinion: Cooperative societies are based on the principles of co-operation and therefore harmony among members is important. Internal quarrels arising as a result of contrary viewpoints may lead to difficulties in decision making. Personal interests may start to dominate the welfare motive and the benefit of other members may take a backseat if the personal gain is given preference by certain members. Such disputes affect the functioning of the co-operative societies.
• Lack of Interest: The members of the managing committee who offer honorary services may not have much interest in the functioning. The paid office-bearers of cooperative societies do not take an interest in the functioning of societies due to the absence of profit motive. Thus there is no motivation and accountability. As a result, the cooperatives become inactive and ultimately cease to work.
• Corruption: Due to the lack of profit motive there is a possibility of fraud and corruption in management. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. There may be misappropriations of funds by the committee members for their personal gains. Many cooperative societies closed down because of corruption and misuse of funds.

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Partnership:

According to The Indian Contract Act, 1872 “Partnership is the relation which subsists between persons who have agreed to combine their property, labour or skill in some business and to share the profits therefrom between them.

The Indian Partnership Act, 1932 defines partnership as “the relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.”

Feature of Partnership:

• Formation: The partnership form of business organization is governed by the Indian Partnership Act, 1932. It comes into existence through a legal agreement wherein the terms and conditions governing the relationship among the partners, sharing of profits and losses and the manner of conducting the business are specified. Thus a contract between the partners must be created to form a partnership firm. A partnership firm is not a separate legal entity. The business carried out by partnership firm must be lawful and should have the motive of profit. If two or more people come together for charitable or social purposes, then it does not constitute a partnership.
• Liability: The partners of a firm have unlimited liability. The partners are all individually and jointly liable for the firm and the payment of all debts.  Personal assets may be used for repaying debts in case the business assets are insufficient. All the partners are responsible for the debts jointly and they contribute in proportion to their share in the business and as such are liable to that extent. Individually too, each partner can be held responsible for repaying the debts of the business. If the money is recovered from a single partner, then such a partner can later recover from other partners an amount of money equivalent to the shares in liability defined as per the partnership agreement and has the capacity to sue other partners.
• Risk Bearing: The partners bear the risks involved in running a business as a team. The reward comes in the form of profits which are shared by the partners in an agreed ratio. However, they also share losses in the same ratio in the event of the firm incurring losses.
• Continuity: A partnership cannot carry out in perpetuity.  The death, retirement, bankruptcy, insolvency or insanity of any partner can bring an end to the business. In such a case, the remaining partners may if they so desire to continue the business on the basis of a new agreement. Similarly, the partnership of a father cannot be inherited by his son. If all the other partners agree, he can be added on as a new partner.
• Restrictions on Transfer of Share: No partner can transfer his share to any outside person without seeking the consent of all other partners. Even the partnership of a father cannot be inherited by his son. If all the other partners agree, he can be added on as a new partner.
• Decision making and control: The partners share amongst themselves the responsibility of decision making and control of day to day activities. Decisions are generally taken with mutual consent. Thus, the activities of a partnership firm are managed through the joint efforts of all the partners.
• Principal-Agent Relationship: The partnership firm may be carried on by all partners or any of them acting for all. While dealing with the firm’s transactions, each partner is entitled to represent the firm and other partners. In this way, a partner is an agent as well as the principal of the firm and agent of the other partners.
• Membership: The Partnership Act itself is silent on this issue, but the Companies Act, 2013 provides clarity about the membership in a partnership firm. The minimum number of members needed to start a partnership firm is two, while the maximum number, in case of the banking industry, is ten and in case of other businesses, it is twenty. If the number of partners increases beyond the prescribed limit, then it will become an illegal entity or association.

Merits of Partnership:

• Ease of Formation and Closure: Partnership is a contractual agreement between the partners to run a firm. Hence, it relatively eases to form due to minimal legal requirements. The registration of a partnership is desirable, but not obligatory. Hence a partnership firm can be formed easily by putting an agreement between the prospective partners into place whereby they agree to carry out the business of the firm and share risks. Closure of the firm is also an easy task.
• Balanced Decision Making and Judgment: As it is said that combined abilities and judgment, when properly integrated produce a result that becomes appreciably greater than the sum of all individual capacities. As there are more than one owners in partnership, all the partners may be involved in decision making. The partners can oversee different functions according to their areas of expertise. Because an individual is not forced to handle different activities, this not only reduces the burden of work but also leads to fewer errors in judgments. This gives the firm advantage of collective expertise for taking better decisions. As a consequence, decisions are likely to be more balanced.
• More Funds: The greatest advantage of partnership over sole proprietorship is that the partnership enjoys large resources than a sole proprietorship.  In a partnership, the capital is contributed by a number of partners. The partnership firms can also arrange money from the outside sources. This makes it possible to raise a larger amount of funds as compared to a sole proprietor and undertake additional operations when needed. Thus the advantage of economies of scale can be taken.
• Sharing of Risks: The risks involved in running a partnership firm are shared by all the partners. This reduces the anxiety, burden, and stress on individual partners.
• Secrecy: Such a firm is not legally required to publish its accounts and submit its reports. Hence it is able to maintain the confidentiality of information relating to its operations.

Demerits of Partnership:

• Unlimited liability: The liability of the partners for the debts of the business is unlimited. Partners are liable to repay debts even from their personal resources in case the business assets are not sufficient to meet its debts. The liability of partners is both joint and several which may prove to be a drawback for those partners who have greater personal wealth. They will have to repay the entire debt in case the other partners are unable to do so.
• Limited resources: There is a restriction on the number of partners in a firm. There can be a minimum two and maximum of 20 partners in a partnership firm. In order to secure harmony amongst the members of the firm, generally, the number of partners is kept smaller than allowed by the law.  Hence contribution in terms of capital investment is usually not sufficient to support large scale business operations. As a result, partnership firms face problems in expansion beyond a certain size.
• Possibility of Disharmony and Conflicts: Partnership is run by a group of persons wherein decision-making authority is shared. The difference in opinion on some issues may lead to disputes between partners and may lead to disharmony and lack of management in the business. Decisions of one partner are binding on other partners. Thus an unwise decision by anyone partner may result in financial ruin for all others. When differences arise, each partner tries to blame the other partner about his dishonest dealings and working against the interest of the firm. This may result in disruption and ultimate dissolution of the firm.
• Transferability: Absent an agreement to the contrary, the default rule in partnerships is that one person’s stake cannot be transferred to another without prior consent from all of the remaining partners. This inflexibility is especially undesirable when the parties have existing disagreements. In case a partner desires to leave the firm, this can result in termination of partnership as there is a restriction on the transfer of ownership. This restricts the liquidity of his investment.
• Lack of Continuity: Partnership comes to an end with the death, retirement, insolvency or lunacy of any partner. The partnership may come to end if a single partner expresses his desire to dissolve the partnership or to get it dissolved by the order of the court on account of the wrongful act of one or more other partners. The lack of trust among the partners may lead to the dissolution of the firm. It may result in a lack of continuity. However, the remaining partners can enter into a fresh agreement and continue to run the business.
• Unclear Authority: In partnership, there may be a potential vagueness of each person’s responsibilities, both to those in the partnership and to those outside it. A traditional partnership is an equal stake with equal authority distributed between the members. There is no hierarchy of authority. To third parties, this means that all partners act on behalf of the partnership, can enter into contracts, and by the same token, bind the partnership into unwanted agreements.
• Lack of Public Confidence: A partnership firm is not subject to any regulation and no legal formation and functioning.  It is not legally required to publish its financial reports or make other related information public. Hence it is difficult for any member of the public to ascertain the true financial status of a partnership firm. Similarly, the public listen to too many stories regarding frauds by partners and dissolution of partnership firms. Hence the confidence of the public in partnership firms is generally low.
• Burden of Implied Authority: Each partner is an agent for the firm and for remaining partners. When anyone partner who is lazy, negligent or creates some blunder, guilty of corrupt practices or playing foul, then other partners are equally liable financially and without limit for his act. It puts a heavy financial burden on remaining partners which lead to the closure of the firm.
• Liability After Retirement: In this form of business organization, the retiring partner continues to be liable for all acts done when he was a partner. Retiring partner must give a public notice of his retirement otherwise he would be held responsible for the acts of other partners even after retirement.

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Joint Stock Companies:

Proprietorship and partnership forms of ownership fails to meet these needs of finance, technical expertise, etc. The growth is hindered also due to unlimited liability, lack of continuity and limited resources. The concept of Joint Stock Company was evolved to overcome these limitations. Joint stock company has become the dominant form of ownership for large scale enterprises because it enables collection of vast financial and managerial resources with provision for limited liability and continuity of operations.

A joint stock company is an incorporated and voluntary association of individuals with a distinctive name, perpetual succession, limited liability and common seal, and usually having a joint capital divided into transferable shares of a fixed value. Advantages and disadvantages of incorporation will be explained in detail in upcoming articles.

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Conclusion:

A sole proprietorship is among the simplest forms of business organization, which is why it has minimal or no registration formalities. This is the ideal form of organization for small or medium-scale businesses. Hindu Undivided Family Business is a special form of business entity that is limited only to India. Such forms of business organizations are governed by the Hindu law prevalent in the country. A cooperative society is a type of business organization that combines joint ownership with shared leadership. Such forms of business organizations are common in sectors like healthcare, finance, food, agriculture. A partnership is a mutual agreement between two or more parties that agree to carry out a common business. It is governed by the Indian Partne

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