Factors to keep in mind while selecting business
Factors to keep in mind while selecting business: In this article we are going to explain clearly about factors to select a business please do ready the article clearly and give comment section below
A business may have several types. Every form of business has its own advantages and disadvantages because of that businessman is facing many problems in selecting suitable form of business or organisation. Once a organisation is chosen, it is difficult to change.
Factors influencing the form of busines
A number of business exist to suit the necessity of different enterprises. They are
Nature of business
The nature of business plays an main roll in the selection of an organisation. For example if a business related to trading of goods or seasonal goods, the trading is suitable for this type business. If dealings concerned with a large scale market, then company is suitable for thar form of business. Business activities required pooling skills(join or form a pool of people) for organised concern, suitable for partnership.
To set up a business, requirement of capital decided based on the nature of business, on the type of operations. If operations is in a large scale the capital requirements are also in large scale. A sole trading business is a sole proprietorship, is sufficient when capital requirements are less. For any business investment is the major pillar of a company. A company can also rise funds from outside and also the capital influence directly on the business.
Nature of liability
Liability means,the state of being legally responsible for something or a person can be accounted by law. In a business liability it may be limited or unlimited. In a small scale business liability is unlimited. When a business has more risk, the company form of an organisations is suitable
The raise of a organisation depends upon administrative managerial needs. If a business concerns is small the management provided to only one person. If the business is in large scale, it need certain specialised managers to a number of persons in the organisation. Then the liability will be limited on this basis the company form of an organisation is suitable.
Continuity of existence
If company continuity is higher will be the life of company,if company continuity is lower will be the risk and liability of the members. A sole trading business is closed after the death of owner. So, a company form of an company is suitable for the stability of the company. If a businessman want to continue his business for infinity he has choose the co-operative form of organisations. Even the Society is interested in continuity of a business.
In order to consider a business form of organisations we have to decide the some rules and regulations of a government. It may be company or co-operative, we have to follow rules and regulations of the government. If a person want start a business he has to follow the rules and guidelines given by government. When a businessman not interested in Following formalities, he can go for sole trading.
If a businessman want total control over business and operations he has to go for sole trading. If he not choosen for control he can go partnership form of business
Impact of taxation
The size or force of the business is basis taxation. Some of taxes or excise duty, sales tax etc, are the taxes that effect all the types of business. In a sole trading concern the liability of tax is less. If it is a company or partnership form organisation the liability of tax is high.
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