The UNINCORPERATED

business

Submitted to
Miss mariyum hussain

Submitted by
Aliza khalil
ammara irfan
Ayesha ali
barya Fatima

Contents
 Unincorporated business………………………………………..……. 3
 Sole proprietorship……………………………………………………….3

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 Advantages of sole proprietorship…………………………………4
 Disadvantages of sole proprietorship……………………………..5
 Example………………………………………………………………………...6
 Sole proprietorship registration……………………………………..7
 Partnership……………………………………………………………………8
 Examples……………………………………………………………………….9
 Advantages of partnership……………………………………………10
 Disadvantages of partnership……………………………………….11
 Types of partnership…………………………………………………….11
 General partnership……………………………………………………..12
 Advantages of general partnership………………………………..12
 Disadvantages of general partnership……………......................13
 Examples………………………………………………………………………14
 Limited partnership………………………………………………………15
 Advantages of partnership…………………………………………….15
 Disadvantages of partnership………………………………………..16
 Examples………………………………………………………………………17
 Joint stock company………………………………………………………18
 Examples ………………………………………………………………………18
 Advantages of joint stock company…………………………………19
 Disadvantages of Joint Stock Company…………………………....20
 Types of joint stock company…………………………………………..21
 Conclusion……………………………………………………………….…….22

THE UNINCORPORATED BUSINESSES

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The central feature of most unincorporated businesses is personal liability for the sole trader,
partner or member of the management committee. That means that those individuals enter
into obligations, such as contracts, on behalf of their organization and they are responsible for
its debts and other liabilities. If you are on the management committee of an unincorporated
association your personal assets are at risk if the assets of the business are not sufficient to
cover all the debts and liabilities.

SOLE PROPRIETORSHIP

A sole proprietorship, also known as the sole trader or simply a proprietorship, is a

type of business entity that is owned and run by one natural person and in which there is
no legal distinction between the owner and the business. The owner is in direct control of
all elements and is legally accountable for the finances of such business and this may
include debts, loans, loss etc.

The owner receives all profits (subject to taxation specific to the business) and has
unlimited responsibility for all losses and debts. Every asset of the business is owned by the
proprietor and all debts of the business are the proprietor's. It is a "sole" proprietorship in
contrast with in partnership (which has at least two owners).

Do I Need a Lawyer to Start a Sole Proprietorship?

If you plan on starting a sole proprietorship, you should be fully aware of the various pros
and cons that are involved in such a business endeavor. It would be a wise decision to
consult with a business lawyer before you file for sole proprietorship. Business laws vary
from state to state, and a business attorney can help explain the various laws to you. Also,
your lawyer can help you calculate the risks involved and help determine whether a sole
proprietorship is the right business structure for you.

Advantages of Sole Proprietorship

There are many reasons why a person would choose to start their business up using a sole
proprietorship structure. Some of the main advantages of sole proprietorships include:

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Ease of formation
Starting a sole proprietorship is much less complicated than starting a formal corporation,
and also much cheaper. Some states allow sole proprietorships to be formed without the
double taxation standards applicable to most corporations. The proprietorship can be
named after the owner, or a fictitious name can be used to enhance the business’
marketing.

Tax benefits
The owner of a sole proprietorship is not required to file a separate business tax report.
Instead, they will list business information and figures within their individual tax return.
This can save additional costs on accounting and tax filing. The business will be taxed at the
rates applied to personal income, not corporate tax rates .

Employment
Sole proprietorships can hire employees. This can lead to many of the benefits associated
with job creation, such as tax breaks. Also, spouses of the business owner can be employed
without having to be formally declared as an employee. Married couples can also start a
sole proprietorship, though liability can only assumed by one individual.

Decision making
As the owner and boss of sole proprietorship enjoys freedom and flexibility in decision
making. Decision can be made promptly without consulting others. This freedom and
control also allows the sole proprietorship react quickly to changes in business conditions
without having to discuss the reasons why.

Ease of dissolution
A sole proprietorship can be ended easily as it was begun. No one needs to be consulted.
All the owner must do is pay the bills, close the doors and case operates.

Changing business structure

If your business grows to a place that the business structure of a sole proprietorship no longer works to
your advantage, you can easily change your business structure to a more complex model. The only
requirement for going from a sole proprietorship to another business structure is filling out the
paperwork for your new business structure. You are not required to fill out paperwork with a regulatory
body because sole proprietorships are not governed by regulatory bodies.

Disadvantages of Sole Proprietorships

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Forming a sole proprietorship does involve some risks, mainly to the owner of the
business, as legally speaking they are not treated separately from the business. Some
disadvantages of sole proprietorships are

Unlimited Liability
The business owner will be held directly responsible for any losses, debts, or violations
coming from the business. For example if the business must pay any debts, these will be
satisfied from the owner’s own personal funds. The owner could be sued for any unlawful
acts committed by the employees. This is drastically different from corporations, wherein
the members enjoy limited liability (i.e., they cannot be held liable for losses or violations)

Taxes
 While there are many tax benefits to sole proprietorships, a main drawback is that the
owner must pay self-employment taxes. Also, some tax benefits may not be deductible,
such as health insurance premiums for employees

Lack of continuity
 The business does not continue if the owner becomes deceased or incapacitated, since they
are treated as one and the same. Upon the owner’s death, the business is liquidated and
becomes part of the owner’s personal estate, to be distributed to beneficiaries. This can
result in heavy tax consequences on beneficiaries due to inheritance taxes and estate taxes

Difficulty in raising capital

 Since the initial funds are usually provided by the owner, it can be difficult to generate
capital. Sole proprietorships do not issue stocks or other money-generating investments
like corporations do

Lack of business and management skills

By its nature a sole proprietorship places the demands for business and management skills
on one person the owner. One person can hardly be an expert in such board and divers
fields as finance, accounting, marketing, production and laws. As a result managing a sole
proprietorship is often difficult, and success may be blocked by the owner’s limitations.

Difficulty in attracting employees

An additional shortcoming of sole proprietorship is the difficulty of hiring and keeping
highly talented ambitious employees. The opportunities for development and advancement
are quite limited in a small business.

Example of Sole Proprietorship

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History of Subway
Back in 1965, Fred Deluca set out to fulfill his dream of becoming a medical doctor.
Searching for a way to help pay for his education, a family friend suggested he open a
submarine sandwich shop.

With a loan of $1,000, the friend Dr. Peter Buck offered to become Fred’s partner, and a
business relationship was forged that would change the landscape of the fast food industry.
The first store was opened in Bridgeport, August, 1965. Then, they set a goal of having 32
stores opened in 10 years. Fred soon learned the basics of running a business, as well as the
importance of serving a well-made, high quality product, providing excellent customer
service, keeping operating costs low and finding great locations. These early lessons
continue to serve as the foundation for successful SUBWAY® restaurants around the
world.

A Fresh Future
Today, the SUBWAY® brand is the world's largest submarine sandwich chain with more
than 37,000 locations around the world. We’ve become the leading choice for people
seeking quick, nutritious meals that the whole family can enjoy. From the beginning, Fred
has had a clear vision for the future of the SUBWAY® brand.

Sole Proprietorship Registration

ITNA Consultants Sole Proprietor Registration for Just Rs. 7,000 in 3 to 5 working Days.

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Sole proprietor is the type of business run and managed by a single person or in the
meaning of law there is no distinction between the owner and business in terms of law. In
simple words any case or suit filed against the business will be treated as it is filed directly
against the owner. In sole proprietor registration all the profit, loss and assets and
liabilities are in fact the profit, loss and asset liability of the owner. The term sole
proprietor means the business has only single owner and there are no other directors or
partners involved in sole proprietor business registration.

The structure of sole proprietor business registration is the simplest as compare to any
other form of business such as private limited company registration or partnership firm
registration. One of the most important reason for easy handling of sole proprietor
business is that it is managed by single person but this does not mean that there is any sort
of restriction for employment and sole proprietor can employ as number of employees as
he wanted to run his business efficiently.

The sole proprietor can use any business name depending on the name mentioned in the
sole proprietor registration certificate issued by the Federal Board of Revenue. Sole
proprietor is also allowed to open the Bank Account with the name of the business.

So if you are interested in registering your business as sole proprietor ITNA Consultants is
the best consultancy firm that can offer you the business registration.

 Documents Required for Sole Proprietor Registration:

1. CNIC of the Person Applying for Sole Proprietor Registration.

2. Name of the Business.

3. Address of the Business.

4. Letter Head of the Business.

5. Electricity Bill of the Address.

6. Bank Account Number, Bank Name and Branch.

Partnership
A business organization in which two or more individuals manage and operate a business.
Both owners are equally and personally liable for the debts from the business. Partnerships
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are created to pool talents, provide more financial resources than are possible with a sole
proprietorship, and perhaps provide support for individuals who wish to enter a business
but do not want to “go it alone”.

Forming a partnership
When you set up a business partnership you need to:

 choose a name

 choose a ‘nominated partner’

 register with HM Revenue and Customs (HMRC)

The ‘nominated partner’ is responsible for managing the partnership’s tax returns and
keeping business records.
A partnership may be entered into by simply discussing a business proposition with a
prospective partner or partners and reaching an agreement. This approach has limitations:
people may forget what they agreed on difficult times, may force the business to dissolve,
which can result in decisions being made emotionally; and differences of opinion may
create misunderstanding.

A better solution is to have an experienced lawyer draw up written articles of partnership,

a contractual agreement that establishes the legal relationship between partners.

It may cover the following points:

 management duties of each partner

 Contribution of each partner in terms of skills, money or equipment.
 How the compensation will be determined(profit, salary)
 Procedures for selling interests in the partnership
 How conflicts will be resolved
 How assets will distribute
 How business will dissolve

Examples of Partnership

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There are several famous examples of business partnerships, including Google, a company
founded by Larry Page and Sergey Brin. Page and Brin met at Stanford University while
attending graduate school. Although they initially argued a lot, they successfully
collaborated on a research paper about a hyper textual web search engine. The concepts
from that paper formed the core of the Google search engine.
Not all entrepreneurs need co-founders, but many successful companies -- including Apple, eBay,
and Twitter -- were built by multiple leaders with productive relationships. 
How did these individuals find their business counterparts? And what made their combined skill-
sets a recipe for success? 
Not surprisingly, many were long-time friends, classmates, or relatives.  Others, however, did not
get along initially. Some still are not amicable, despite their joint achievements.
There is a common trend: the best-rounded pairs recognized their individual limitations and
respected what the other could bring to a partnership.  Many of these duos have gone on to run
some of the most successful businesses of our time.

Advantages of Partnership

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Like sole proprietorship partnership have many advantages

Ease of formation
Partnerships are easy to form. No state approval is required to form a partnership, nor
does the partnership have to be legal (though it is advisable). Once basic agreements on
profits, responsibilities, finances and termination procedures are resolved, a partnership
can begin

Capital
Due to the nature of the business, the partners will fund the business with startup capital.
This means that the more partners there are, the more money they can put into the
business, which will allow better flexibility and more potential for growth. It also means
more potential profit, which will be equally shared between the partners.

Flexibility
A partnership is generally easier to form, manage and run. They are less strictly regulated
than companies, in terms of the laws governing the formation and because the partners
have the only say in the way the business is run (without interference by shareholders)
they are far more flexible in terms of management, as long as all the partners can agree.

Shared Responsibility
Partners can share the responsibility of the running of the business. This will allow them
to make the most of their abilities. Rather than splitting the management and taking an
equal share of each business task, they might well split the work according to their skills. So
if one partner is good with figures, they might deal with the book keeping and accounts,
while the other partner might have a flare for sales and therefore be the main sales person
for the business.

Decision Making
Partners share the decision making and can help each other out when they need to. More
partners mean more brains that can be picked for business ideas and for the solving of
problems that the business encounters.

Tax advantages
As with sole proprietorship, the profit from a partnership venture is not taxed
as a business. Any profits become personal income of the partners and are
taxed as personal income.

Disadvantages of Partnership

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Disagreements
One of the most obvious disadvantages of partnership is the danger of disagreements
between the partners. Obviously people are likely to have different ideas on how the
business should be run, who should be doing what and what the best interests of the
business are. This can lead to disagreements and disputes which might not only harm the
business, but also the relationship of those involved. This is why it is always advisable to
draft a deed of partnership during the formation period to ensure that everyone is aware of
what procedures will be in place in case of disagreement and what will happen if the
partnership is dissolved.

Agreement
Because the partnership is jointly run, it is necessary that all the partners agree with things
that are being done. This means that in some circumstances there are fewer freedoms with
regards to the management of the business especially compared to sole traders. However,
there is still more flexibility than with limited companies where the directors must bow to
the will of the members (shareholders).

Unlimited Liability
Ordinary Partnerships are subject to unlimited liability, which means that each of the
partners shares the liability and financial risks of the business. This can be off putting for
some people. This can be countered by the formation of a limited liability partnership,
which benefits from the advantages of limited liability granted to limited companies, while
still taking advantage of the flexibility of the partnership model.

Taxation
One of the major disadvantages of partnership, taxation laws mean that partners must pay
tax in the same way as sole traders, each submitting a Assessment tax return each year. They
are also required to register as self employed with HM Revenue & Customs. The current
laws mean that if the partnership (and the partners) brings in more than a certain level,
then they are subject to greater levels of personal taxation than they would be in a limited
company. This means that in most cases setting up a limited company would be more
beneficial as the taxation laws are more favorable Profit Sharing – Partners share the
profits equally. This can lead to inconsistency where one or more partners aren’t putting a
fair share of effort into the running or management of the business, but still reaping the
rewards

Types of partnership

The two major types of partnerships are:

General partnership
Limited partnership

General partnership

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A general partnership is a business entity that is made up of two or more entities to carry
on a trade or business. Each partner contributes money, property, labor, or special skills
and each partner shares in the profits and losses from the business. A general partnership
must have two or more persons engaged in a business for profit. The business is not a
separately taxed entity; rather, it is a conduit where the profit or loss flows through to the
partners. The partners report their share of the partnership profit or loss on their
individual income tax returns. All partners enter into partnership by either oral or written
agreement that must cover all terms of the parties’ business relationship. Partnerships are
quite flexible; a great variety of control and management structures are available by
agreement.

Partners are jointly and severally liable for all legal and financial obligations of the
partnership and for all wrongful acts of any partner acting in the ordinary course of
partnership business. Partnership income is taxed as personal income to the partners.

Advantages of general partnership

Easy Formation
General Partnerships require very little paperwork. Unlike corporations, partnerships can
operate in multiple states without getting a new permit for each state. Usually, general
partnerships must abide by fewer regulations and are under less government supervision
than corporations. Due diligence requires all partners to work together on a partnership
agreement that all will follow, even though you don't need to file one with the state. Under
Texas law, for example, a partnership may be formed through an oral agreement, although
a written agreement is easier to prove in court.

Simple Structure
“General partnerships thrive when each partner brings a specific strength to the business,”
reports All Business website. Each partner should have a clearly defined role and business
decisions should be handled accordingly. Offering a partner position to an important
employee can be a useful bargaining chip. Unless the agreement states otherwise, all
partners have equal voting rights within the group regardless of how much capital they
contributed to the venture. Partners have a financial duty to one another, and are expected
to act in the best interests of the partnership as a whole rather than just for their personal
benefit.

Pass Through Profits and Taxation

Because individuals form partnerships, they are taxed just like a sole proprietorship. Each
partner must include her business income on her personal tax return and she can deduct
business losses on her individual tax return as well. This is called a “pass through” entity
because the profits and tax obligations pass through the company to the partners where
income is divided according to their agreement.

Dissolution
A partnership can be dissolved at any time and partners have full liability for their

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business. In many states, upon the death or withdrawal of one partner, the entire
partnership is dissolves, but the 1994 Texas Revised Partnership Act, for example, provides
for a partnership to continue if its continuation is provided for in the partnership
agreement. This provides protection to creditors so that the legal entity remains liable for
the debts upon the addition or withdrawal of partners.

Disadvantages of general partnership

Contribution towards losses

Partners are jointly and severally liable for the actions of other partnership obligations
including contracts, torts, and breaches of trust. Joint and several liability means that if a
third party were to sue the partners; the third party can sue any one of the partners
without suing all of them. If a partner has been sued but cannot pay the third party the full
amount, the third party may collect the money from the remaining partners.

Management issues
Because partners can make investments from their personal finances and the money
invested is then owned by all partners, it’s easy for questions of reimbursement to arise.
What if one partner didn’t want the company to take that money and doesn’t want the
company to pay it back? The same kinds of issues can arise with purchases for the company
or even with decisions on which suppliers or clients to take on. Having all partners equal in
power and responsibility can cause problems unless proper guidelines are set out.

Risk of personal assets

Each partner is individually liable for the debts and obligations of the business; if the
business does not have enough assets to pay back business debts, creditors can take the
personal assets of the partners.

No individual decision
A partner cannot transfer interest in the business without the unanimous consent of the
partners.

Dissolution
Partnerships can potentially be unstable because of the danger of dissolution if one partner
wants to withdrawal from the business or dies.

Examples of general partnership

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A general partnership is used by professionals and small-business owners who desire
certain tax advantages and simplified methods of business management.

Law Firm
A general partnership is a typical business structure for legal firms. Many law firms that
operate as a general partnership have two or more partners. In most cases, the firm's name
includes the last names of each partner such as “Law Offices of Smith & Jones,” or “Smith,
Jones & Reed, Attorneys at Law.” A general partnership does not distinguish between the
business and each individual partner. Each partner is personally liable for the debts and
obligations of the business. All partners are also responsible for one another’s actions.

Medical Practice
Physicians often form a general partnership to minimize the financial and legal risks of
operating a medical practice alone. A general partnership benefits physicians by enabling
new doctors who are usually deep in student loan debt to secure business startup loans.
This type of partnership also helps reduce overhead expenses by allowing doctors to share
office staff. With many medical partnerships, physicians share one facility but maintain an
individual practice. Doctors share medical receptionists, office managers, nurses and
laboratory and office equipment but do not have to pay for and manage these resources
alone.

Architectural Firm
Licensed architects and design professionals often go into business together as a general
partnership. Architects who share the same design philosophy and want to reduce startup
and operation costs opt for a general partnership business structure. This structure allows
each architect or partner to focus on individual strengths such as creativity, design ability
or leadership skills while maintaining an equal share in the management and decision-
making responsibilities of the business.

Spousal Ventures
A general partnership is the ideal business structure for husband and wife co-owners
because it is the default structure for spouses who do not wish to incorporate. Spouses who
go into business together are usually classified as a partnership for the simplicity of startup
and for tax purposes. Depending on the type of business, spouses can also elect not to be
treated as a partnership when filing federal income taxes so they can maximize credits for
Social Security and Medicare taxes

Limited partnership

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A limited partnership consists of one or more general partners and one or more limited
partners. The same person can be both a general partner and a limited partner, as long as
there are at least two legal persons who are partners in the partnership. The general
partner is responsible for the management of the affairs of the partnership, and he has
unlimited personal liability for all debts and obligations. Limited partners have no personal
liability. The limited partner stands to lose only the amount which he has contributed and
any amounts which he has obligated himself to contribute under the terms of the
partnership agreement. Limited partnerships are often used as investment vehicles for
large projects requiring a considerable amount of cash. Individual limited partners
contributing money to a venture, but not having management powers, will not have any
personal liability for the debts of the business.

Advantages of limited Partnership

Tax Benefits
An advantage to organizing as a limited partnership is that you do not have to pay both
personal and business taxes. In other words, according to the Small Business
Administration, “The partnership itself is not responsible for paying taxes on the income
generated by the business.” The business is required to file a tax return but only for record
purposes. However, you are responsible for paying personal income taxes on earnings you
receive from the business. In addition, each of the business’ partners must also pay self-
employment tax, which is comprised of Social Security and Medicare taxes .

Public Training
If you and your partners trade the company's stocks publicly, you and your partners can
gain investors. Should your company’s profits rise, you, your business partners and the
company’s investors can receive higher returns on the stock. According to the National
Association of Publicly Traded Partnerships, investors in your company can also receive
regular cash distributions.

As Many Owners As Needed

One of the greatest things of a limited liability partnership is that there is no limit on the
amount of owners that can be involved with the business. This is great because it evenly
spreads out the amount of liability that each partner can have if something where to go
wrong with the business.

Much Less Liability

Just as the name suggests, limited liability partnerships limit your liability. Since there are
multiple owners involved in the business all of the risks of the business are spread out and
made much smaller than if a single person was responsible for the business on their own.
This generally refers to legal issues, like if the company was sued for any reason.

Great Flexibility
Flexibility is a defining characteristic of limited liability partnerships. Each partner in the

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business has the ability to decide how much they want to contribute and how much of a
partner they truly want to be in the business. They are also not obligated to participate in
business meetings or consultations with anyone that they do not feel the need to .

Disadvantage of Limited Partnership

Business Losses Liability

Should the business suffer losses, each partner is held personally responsible for those
losses. Even if you sell your shares in the company, you are still liable for losses the
business suffered before you sold your shares. However, this disadvantage can be lessened
if you start the business with enough partners to prevent any one partner from having to
absorb half or more of the business losses

Legal Responsibility
You are legally responsible for the actions of each of your business partners. This
disadvantage could negatively impact you even if you did not engage in unethical or illegal
activities such as insider trading, tax fraud or sexual harassment but another one of the
business’ partners did. For example, if you are summoned to court to testify about illegal
activities one of your partners conducted through the business and you are unable to prove
you did not participate in the activities, you could be forced to pay fines, penalties or serve
jail time.

Life of Partnership
Another disadvantage is that if one of the business’ general partners dies, the company
dissolves unless partners agree that the business will continue. This agreement is generally
made at the time the company is formed. Also, if a general partner exits the business
voluntarily, he can request an accounting to determine how much of the company’s profits
the partners are entitled to receive.

Risks to the general partners

In limited partnership, the general partners must carry the burden of all the business’s
debts and obligations. If the company is sued or enters into bankruptcy, all debts and
liabilities are the responsibility of the general partners. Also, each general partner has the
ability to make decisions on behalf of the company, and those decisions become the
responsibility of all the general partners.

Compliance challenges
 A general partnership does require less paperwork than a corporation, but because in
essence you have investors (the limited partners), you must still hold annual meetings and
create a detailed partnership agreement.

Examples of Limited Partnership

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Most states require each LLP partner to have a professional license in a chosen field. Therefore, most
examples of LLPs include partnerships among:
physician
attorney
accountants,
architects,
licensed financial advisers
veterinarians and undertakers

Grant Thornton LLP

It is the American member firm of Grant Thornton International, the fifth largest accounting network in
the world by combined fee income.[1] Grant Thornton LLP is the sixth largest U.S. accounting and
advisory organization.

Skype extends Facebook partnership

Skype Ltd. is extending its partnership with Facebook Inc. today by further integrating its
Internet video calling service with the giant social network. The Internet communications company
is launching new updates that embed its software more directly into Facebook, allowing video chats
across both the Facebook and Skype networks. Considering Facebook has more than 800 million
members and Skype has 170 million members, the combination is quite a global network.

Exxon Mobil
Exxon Mobile Bay Limited Partnership was incorporated in 1995 and is based in the United States. Exxon
Mobile Bay Limited Partnership operates as a subsidiary of Exxon Mobil Corporation. It is the largest
direct descendant of John D. Rockefeller's Standard Oil Company,[3] and was formed on November 30,
1999 by the merger of Exxon (originally the Standard Oil Company of New Jersey) and Mobil (originally
the Standard Oil Company of New York).

Joint Venture

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An association of two or more individuals or companies engaged in a solitary business
enterprise for profit without actual partnership or incorporation; also called a joint
adventure.
A joint venture is a contractual business undertaking between two or more parties. It is
similar to a business partnership, with one key difference: a partnership generally involves
an ongoing, long-term business relationship, whereas a joint venture is based on a single
business transaction. Individuals or companies choose to enter joint ventures in order to
share strengths, minimize risks, and increase competitive advantages in the marketplace.

Examples of Joint Venture

Microsoft Lumia (previously the Nokia Lumia Series) is a range of mobile devices designed and
marketed by Microsoft Mobile and previously by Nokia. Introduced in November 2011, the line
was the result of a long-term partnership between Nokia and Microsoft—as such, all Lumia
smartphones run the Windows Phone operating system. The Lumia name is derived from the
partitive plural form of the word 'lumi', which means 'snow' in the Finnish language, and
Estonian as well.[1]

On 3 September 2013, Microsoft announced its purchase of Nokia's mobile device business, with
the deal closing on 25 April 2014. As a result, the Lumia line is now maintained by Microsoft
Mobile. As part of the transition, Microsoft continued to use the Nokia brand on Lumia devices
until October 2014, when it began to officially phase out the Nokia name in its promotion and
production of smartphones in favor of Microsoft branding.[2] In November 2014, Microsoft
announced the first Microsoft (non-Nokia) branded Lumia device, the Lumia 535.[3] In October
2015, Microsoft announced the first Lumia devices running on Windows 10 Mobile, the Lumia
950, Lumia 950 XL and Lumia 550

Advantages of Joint Venture

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A joint stock company is an association or organization of many persons formed for the
purpose of profit, possessing a common capital contributed by the members composing it;
such capital being divided into shares of which each member holds one or more and the
liability of such a members is limited of the face value of the shares he possess.

Adequacy of Capital
Generally a joint Stock Company has the opportunity to raise huge capital than other types
of business. If the company needs the money it can sell its shares to the public.

Limited Liability
The liability of the shareholder is limited to the face value of the shares he holds. He has no
further liability if he has paid the full value of the shares that he has agreed to pay.

Perpetual Succession
it is another advantage of Joint Stock Company. A Joint Stock Company survives, even if all
members is willing to shut down the company or if even all members die due to natural
disaster.

Transferability of Share
Shareholder have right to sell the shares of the Joint Stock Company to those who are
interested to buy. This right to sell shares of the Joint Stock Company gives a scope to
attract large number of shareholders.

Managerial efficiency
A company can secure the services of highly qualified persons who are expert in different
fields of business management. It is through the company that the capital and business
ability can be linked together for the benefit of both the individual investor and a
community as a whole.

Tax relief
A company enjoy a greater tax relief as compared to other type of business. Company pay
low tax on a higher income as it pays tax in a flat rate. Moreover, a company gets some tax
concessions, if it is establishes operation in backward. Some tax incentives are available for
export promotion also.

Stability
Stability is one of the most important advantages of any company. Shareholders death,
retirement, or sale of stock does not lead to dissolution of the company.

Disadvantages of Joint Stock Company

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Complexity Information
There is a lot of legal requirements to start a company since a company is created under
law, its formations a complex task.

Lack of Control
Buying and selling of shares of a company is real control of an owner has. Since the number
of shareholders is determined by the number of the company, control by the board of
director is difficult.

Double Taxation
In case any company, there are two systems of tax payment. First, on the basis of profit
earned the company. Second, on the basis of dividend earn by the shareholders. So the
shareholders suffer from double taxation.

Lack of Secrecy
Company must provide each shareholder with an annual report. When a large number of
reports are issued, the reports become public. These reports present data on sales volume,
profit, total assets, and other financial matters. Public disclosure of these data enables
competitors and other outsiders to see the company’s financial condition.

Lack of Personal Interest

In most corporations, except the small ones, management and ownership are separate. This
separation can result in a lack of personal interest in the success of the company.

Credit Limitation
Bank and financial institutions have to consider the fact of limited liability of shareholders
of a company. If a company fails, its creditors can look only to the assets of the business to
satisfy claims.

Types of Joint Venture

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There are two types of Joint Venture

 Co-operate Joint Venture

 Separate joint Venture

Co-operate Joint Venture

Co-operate with another business in a limited and specific way. A small business with an
exciting new product might want to sell it through a larger company's distribution
network. The two partners could agree a contract setting out the terms and conditions of
how this would work.

Separate Joint Venture

Separate joint venture business, possibly a new company, to handle a particular contract. A
joint venture company like this can be a very flexible option. The partners each own shares
in the company and agree how it should be managed.

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