The various types of organizational Structure of business with their merits and demerits: Had you Plan to start a Business but it is not decided the form of the structure of that. Like much other Planning of Business, it is also very important to decide the organizational Structure of the Business. Either there are various factors which decide the structure of the business like Ownership status single or partnership, Business service area, Funding of the business, expected turnover of the business, Taxation Aspects etc.
Following are the various types of organizational Structure of business:
- Proprietorship / single owner Firm
- Partnership firm with minimum two business owners
- Private Limited Company listed with
- Public Limited Company
Proprietorship / Single Owner Firm
This is the most common and straightforward structure where an individual claims and works the business in view of which there are no legitimate differences between the Owner and the business. In this type of structure, an Owner has to dominate the business single-handed. All the Income of the Business will be clubbed with the income of the owner and requires no separate Pan card for Business.
- Owner is not answerable to anyone and all the profits are his own.
- All the Income and expenses of the business will be clubbed with the business owner and hence can be benefited accordingly.
- This Provide a more prominent measure of adaptability in the business operations and choices.
- The complete obligation for the business misfortunes will be borne by the Business owner only. All the personal property is also liable for the business debts.
- There is always a risk of business closure in case of any misshaping with business owner, as there is no other one to control over the business.
Partnership Business Structure
A Partnership Business is framed when two or more individuals start an organization together. Here Partner and Business Both are separate for income tax purpose too. Here Business owner is collecting a salary on regular basis and profits after the filing of income Tax return.
- This type of business structures profits by the pooling of experience, abilities, and resources of all individuals.
- This business can be Formed registered as well as unregistered and can be started easily with a normal partnership deed.
- Filing of government duties and forms are easier as compared to companies in partnership Business.
- The responsibility of business liabilities and defaults has to be bear by the partners and business owners.
- In such format, if a partner decides to dissolve its partnership than the business may come to end.
- Income tax rates are higher so if the business profit increases than the amount of tax will increase.
- It is difficult to manage the understanding of two or more people as no one can individually take the decision unless specified in the deed.
The organizational Structure of business of Pvt Ltd Company and Public limited company will be discussed later on requested to share your email id with us so we will send you the updates.