In this form of business organisation, an individual normally uses his own capital, skill and intelligence to carry out some business activity. He is entitled to receive all the profits and gains of his business and also assumes all the risk of ownership. The sole proprietor exercises full control over the affairs of his business. As there is no legal obligation to supply any information regarding his business to anyone, he can maintain maximum secrecy in conducting his business affairs. This type of organisation is particularly suitable for businesses which are small in size and where risk and capital involved are not very large. Any individual can initiate the process of sole proprietorship Business by doing Micro, Small and Medium Enterprises (MSME) Registration currently known as Udyog Adhar Card.

In this form of organisation, few like-minded persons pool up
their resources to form a partnership firm. Section 4 of the Partnership Act,
1932, defines partnership as “The relation between persons who have agreed
to share the profits of a business carried on by all or any of them acting for all”.
The Partnership agreement entered between partners should be binding only
after its printed on applicable stamp paper, notarized and signed by the acting
partners. This applicable stamp paper varies from state to state.

This type of organisation is characterised by the fact that
ownership and management are two separate thing. The capital of the
company is provided by a group of people called shareholders who entrust the
management of the company in the hands of persons known as the Board of
directors. A company is an artificial legal person created by process of law
which makes it an entity separate and distinct from its members who
constitute it. As a natural consequence of incorporation and transferability of
shares, the company has perpetual succession. Thus, it can be said that this
form of organisation is suitable when the capital requirements of a business
are large, the liability of members is expected to be limited and the risks need
to be spread among a larger number of persons.

Incorporation of company:- A company is an association of both natural and
artificial persons incorporated under the existing law of a country. In terms of
the Companies Act, 2013 a “company means a company incorporated under
the Companies Act, 2013 (the Act) or under any of the previous company law”

[Section 2(20)]. In common law, a company is a “legal person” or “legal entity”
separate from, and capable of surviving beyond the lives of its members.
company may be formed for any lawful purpose by –
(a) seven or more persons, where the company to be formed is to be a public
company;
(b) two or more persons, where the company to be formed is to be a private
company; or
(c) one person, where the company to be formed is to be One Person Company
that is to say, a private company, by subscribing their names or his name to a
memorandum and complying with the requirements of this Act in