What is Enterprise

June 30, 2020  



What is Enterprise

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.


Enterprise in nothing but another name of business.

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