Doing business has many form and
they called by different name such as company, organization and there is one
more term and that is enterprise. Lets understand what is enterprise is all
about.
What is Enterprise?
Enterprise is another name of the
business, if you read something about startups and another business you will
come across the word enterprise. We can say that someone left the job and has a
successful enterprise.
Another meaning is when someone
starts the business by taking initiative and taking the risk with some
investment.
Enterprise is mostly a small
company who only runs to generate the profit for the owner and they have not
much mission and vision. If we look in deep enterprise has many meaning like
- ·
Human Skills
Eagerness to do something new
with calculated risk
- ·
Business
A business enterprise which comes
into existence only to make the profit
- ·
Important or
Difficult Challenges
My latest enterprise is swim in Pacific
Ocean.
Every person has a different
meaning of the enterprise however they are related to business and skills.
Types of Enterprise
Enterprise has any types such as
- Partnership
Two or more
people can come together to form a partnership firm. It is required to draft a
partnership deed, which is signed by all the partners indicating the formation
of the partnership.
This deed must clearly specify the name of
the firm, the names of the partners, the capital contributed by each partner
(currently and in the future), the ratio of sharing profit or loss between partners,
the business of the partnership, the duties, rights, powers and obligations of
each partner, and other relevant details. One of the partners can also be
designated the managing partner. Particulars of salaries and other payments to
the partners can also be mentioned in the deed.
- Sole Proprietor
This is the simplest and easiest way to get
started. Just decide on a name and start using it. A sole proprietorship is not
restricted from employing people, acquiring assets, registering intellectual property,
or opening a bank account. There is no paperwork necessary to indicate
formation of the venture. It requires very little by way of documentation and
legal compliance. The problem is that this structure is not conducive to
growth.
A sole proprietorship
implies a one-man show and in case more partners are taken on to fastens
growth, the structure of the firm has to be changed to a partnership firm or a
company. Lenders are also unwilling to lend as the business is in the hands of
one individual and so, the risk is high. In case of liabilities arising from
the conduct of the business, the losses have to be covered by the personal
assets of the proprietor. The liability of the proprietor to pay off all
creditors is unlimited.
- Limited Liability Partnership
This is a concept new to
India and it was introduced on the recommendations of the J.J. Irani Committee.
The unlimited liability of partners is the main reason why partnership firms
have not been able to grow in size to be internationally competitive. The
Limited Liability Partnership (LLP) has the benefits of limited liability but
the members of the partnership have the flexibility to structure their
organization as in a traditional partnership.
In an LLP, the LLP as an entity is liable for
the full extent of its assets but the liability of individual partners is
limited. So, now personal assets of partners are protected from liability
arising from wrong decisions of other partners or employees not under their
direct supervision.
The assets of a partner cannot be attached to
pay the liabilities of arising from the conduct of business in an LLP. However,
one important distinction from a company is that the liability of a ‘negligent’
partner continues to remain unlimited. The definition of a ‘negligent’ partner
is sure to be much debated. Any new or existing firm of two or more persons can
form an LLP.
The J.J. Irani Committee report recommends
two more forms that will be of significance to entrepreneurial ventures. These
recommendations have not yet been implemented as of now, but are likely to be
implemented in the near future.
- One Person Company
The concept of a one-person
company (OPC) will encourage corporatization of entrepreneurial ventures. It is
recommended that the OPC be registered as a private company with one member and
at least one director. To distinguish it from other companies, the suffix OPC
can be used.
- Small Companies
Very demanding statutory
requirements and an imposing fee structure discourage small companies from
incorporation. The J.J. Irani Committee recommended that a framework should be
developed to encourage growth of small corporate entities. It should enable them
to achieve transparency at a low cost through simplified statutory and audit
requirements and a reasonable fee structure.
Conclusion
Enterprise in nothing but another name of business.
