Ownership of Business

Question 1

What is the first step of owner(s) to achieve the goals and objectives?

Answer 1

To achieve the goals and objectives of a business in an effective and efficient manner, the first step of owner(s) is to decide on the type of business organization which means the form of business ownership such as sole proprietorship, partnership, or Limited liability company.

Question 2

What is an Organization?

Answer 2

Organization is a group of people associated/gathered to achieve a particular goal or task.

Question 3

What is business organization?

Answer 3

A business organization is an entity formed for the purpose of carrying on required activities to achieve it’s goals and objectives.

Question 4

What business organization does?

Answer 4

It can be seen as the process of dividing up activities in an effective and efficient manner to enable a system of co-operative activities of two or more persons.
These activities would collectively lead to the completion of common goals and objectives of an entity operated by an individual or group of people.

Question 5

How many forms of business ownership are there?

Answer 5

When entrepreneurs establish a business, they must decide on the form of business ownership.
There are three basic forms of a business ownership:
1)Sole proprietorship
2)Partnership
3)Corporation or the Limited liability company
The form that is chosen can effect the growth, profitablity, risk, and value of the firm

Question 6

What are the features an Organization depends on?

Answer 6

The basic design features of an organization depend on the type of organization, the environment it operates in and it’s nature of business.
For Example
There are certain regulatory requirements to follow to form a bank or an insurance company.

Question 7

What are the features that distinguishes each type of organization?

Answer 7

Each type of organization has features that distinguishes one from the other.
A) Purpose:
They have different purposes. Business organizations exist to make a profit. Public sector organizations exist to provide benefit to the public, such as good government or key services such as health, education, a police force, national defense, and so on.
B) Ownership:
They have different types of owners. Companies are owned by their stakeholders, whereas public sector organizations are owned by the government (as the representative of the general public). Co-operatives are owned by the members.
C) Funding:
Business organizations obtain the funds they need to operate from a variety of sources. A stock market company, for example, obtains its long- term funds from a mixture of reinvesting profits in the business, issuing new shares and borrowing from the lenders. Charities rely on a mixture of government grants and private donations for the funds they need. Public sector organizations obtain their funds from the government, which in turn raises through the taxation.
D) Accountability:
The management of an organization is accountable to its owners for the goals and objectives of the organization. The directors of a company, for example, are accountable to the shareholders for the financial performance of the company. This is the main reason why companies produce their annual report and accounts.

Question 8

What are categories of organizations?

Answer 8

Organizations can be classified in two broad categories:
• Business Organizations, and
• Not-for-profit Organizations

Question 9

What are Business organizations?

Answer 9

This type of organization engages in commercial activities, with the purpose of making a profit.

Question 10

What are types of business organization?

Answer 10

The main types of business organizations are:
1) Sole proprietorships
2) Partnerships
3) Limited Companies or corporations

Question 11

What is Sole proprietorship?

Answer 11

A sole proprietor is an individual who owns and operates his or her own business, but might employ a small number of people. There are no legal formalities needed to set up as a sole proprietor. Any profit made after tax belongs to the owner. The owner is in complete control and is free to make decisions. The independence is one of the key attractions of running a business as a sole proprietor

Question 12

What is example of sole proprietor?

Answer 12

Typical example of sole proprietorships include a local restaurant, a local construction firm, a barber shop, a laundry service, and a local clothing store.

Question 13

What are responsibilities of a sole proprietor?

Answer 13

Sole proprietor must be willing to accept full responsibility for the business’s performance. The pressure of this responsibility can be much greater than employees responsibility.

Question 14

How many hours a sole proprietor works?

Answer 14

Sole proprietor must also be willing to work flexible hours. They are on call at all times and may even have to substitute for a sick employee. Their responsibility for the success of the business encourages them to continually monitor business operations.

Question 15

Which skills a sole proprietor must have?

Answer 15

They must exhibit strong leadership skills, be well organized, and communicate well with employees.

Question 16

How Sole proprietors are successful?

Answer 16

Many Sole proprietors had previous work experience in the market in which they are competing, perhaps as an employee in a competitor’s firm.
For example, restaurant managers commonly establish their own restaurants. Prior experience is critical to understanding the competition and the behavior of customers in the particular market.

Question 17

What are advantages of Sole proprietorships?

Answer 17

1) Ease and Law Cost of Formation
2) Secrecy
3) Distribution and Use of Profits
4) Great Flexibility and Direct Control
5) Ease of Government Regulations
6) Lower Taxation
7) Ease of Dissolution

Question 18

How Sole proprietorship forming is easy?

Answer 18

Forming a Sole proprietorship is relatively easy and inexpensive. In some cases, creating a sole proprietorship involves merely announcing the new business in the local newspaper.

Question 19

What are legal requirements for establishing a sole proprietorship business?

Answer 19

The legal requirements are minimal. A Sole proprietorship need not establish a separate legal entity. The owner may also need to apply for a occupational license to conduct a particular type of business. The specific license requirements vary with the province and even the city where the business is located.

Question 20

How secrecy is advantage of sole proprietorships?

Answer 20

Sole proprietorships make possible greatest degree of secrecy. The proprietor, unlike the owners of a partnership or corporation, does not have to discuss his or her operating plans with other partners or public, minimizing the possibility that competitors can obtain trade secrets. Financial reports need not be disclosed, as do the financial reports of publicly owned corporations.

Question 21

How distribution and use of profits is advantage of sole proprietorships?

Answer 21

All profits from a sole proprietorship belong exclusively to the owner. He or she does not have to share them with any partners or stakeholders. The owner decides how to use the funds— for expansion of the business, or salary increases, for travel to purchase additional inventory, or to find the new customers.

Question 22

How control is advantage of sole proprietorships?

Answer 22

The Sole proprietor has complete control over the business and can make decisions on the spot without anyone else’s approval. This control allows the owner to respond quickly to competitive business conditions or to changes in the economy. The ability to quickly change prices or products can provide a competitive advantage for the business

Question 23

How ease the government regulations is advantage of sole proprietorships?