Business organizations can be classified into the following forms:
- The sole proprietorship
- The partnership
- Private limited companies
- Public limited companies
- Co-operative associations
- Public enterprises
The Sole Proprietorship
This is commonly called the one-man business. The one-man business has the following characteristics
- Formation: it is easy to start
- Ownership: it is owned by one person who is in charge but may have many employees.
- Decision-making: He takes the major decisions. Such a decision may not be efficient
- Capital: He provides the needed capital from personal savings, friends, and relations or through debt such as bank loans. Therefore the capital of the one-man business is relatively small.
- Risk-bearing: The business risks are borne by the owners alone
- Management: The owner is the manager, hence, its management may not be efficient and effective
- Personality of the business: The law does not distinguish between the business and the owner, therefore, the business is not a separate legal personality or entity.
- Liability of owner: He does not have limited liability because the failure of the business could lead to the sale of his private assets.
- Owner-employees relationship: There is a cordial relationship between the owner and his employees
- Ownercustomer's relationship: The relationship between the owner and the customers is cordial because he interacts with them, in most cases, directly.