Types of business organisations that youngsters need to know

Understanding&nbsp;the structure&nbsp;business houses is crucial for any aspiring entrepreneur.&nbsp;If you want to see your child grow up into an adult with strong business acumen, make sure that he&nbsp;has&nbsp;clarity about&nbsp;the&nbsp;various types of&nbsp;organisations that exist and the way they function.&nbsp;On the basis of ownership, there&nbsp;are&nbsp;four types of business organisations:&nbsp;Sole proprietorship, partnership, co-operation, and joint stock company.&nbsp;Here is a low-down on them.&nbsp;



Sole Proprietorship&nbsp; This form of organisational structure is suitable for small businesses, especially in their initial years.&nbsp;In a sole proprietorship, the&nbsp;business is owned, managed and controlled by one individual who is the only recipient of all profits and bearer of all risks. It is particularly common in areas of personalised&nbsp;services such as beauty parlours, hair&nbsp;salons&nbsp;and small-scale&nbsp;local retail shop.&nbsp;



Partnership&nbsp; When the capital invested in the business is by more than one person and all parties share the risks and the profits of the business, then it is known as a partnership. Such a dynamic is known as a&nbsp;partnership at will&nbsp;that lasts until the business dissolves. A partnership can also be formed for the accomplishment of a particular project and automatically ends when the project is complete.&nbsp;This is called as a&nbsp;particular partnership.&nbsp;In a partnership, the amount of say a partner has in the running of the business is proportionate to the percentage of capital&nbsp;he&nbsp;brings&nbsp;into the business.&nbsp;It offers more funds to the business as compared to a sole-proprietorship set-up&nbsp;and lesser risks for&nbsp;each&nbsp;individual.&nbsp;



Co-operative&nbsp; When a company is owned and operated by the people who use its products and services and benefit from what the company has to offer, it’s known as a cooperative.&nbsp;The people who benefit from the products or services of a cooperative business own the cooperative business.&nbsp;In some cases, only members of a cooperative can shop at it. Some cooperatives are open to all, but provide special incentives to members.&nbsp;The member-owners of a co-op have a say in how the cooperative&nbsp;should be&nbsp;run but the opinion of one co-op member does not have more weight than the opinion of another co-op member.&nbsp;



Joint Stock Company&nbsp; What separates a joint stock company from other forms of business organisations is that it is a legal entity that exists separately from its owners. Even&nbsp;if&nbsp;the owners of the company change, it doesn’t alter the identity of the company in the eyes of the law.&nbsp;The company is granted a common seal to validate all its documents. The owners of a joint stock company&nbsp;are its shareholders while a&nbsp;Board of Directors is the managing body.&nbsp;A company can be:&nbsp;



<ul><li>private, wherein the right of the members to transfer shares is restricted to a certain pool&nbsp;&nbsp; or&nbsp;</li><li>public, where the public&nbsp;is&nbsp;offered the opportunity to buy and sell its shares freely.&nbsp;</li></ul>



Anyone who owns even a single share of a company is considered its owner. These shares can be transferred freely from one person to another in the share market or the stock market.&nbsp;The profits and losses are shared by all owners to the extent of their contribution in the capital, that is, the number of shares they hold.&nbsp;&nbsp;

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