Business organization refers to an integrated structure where all necessary arrangements required to conduct business in an optimized manner. It refers to each and every step that needs to be executed for establishing and maintaining relationships and communication between men, material, money, and machinery to carry on the business in an efficient manner for earning profits. This may be called the Planning, organizing and structuring which are an integral part of business management.
The arrangements which are essential and bear the characteristics of this process of organizing the factors required for commencing and carrying on the business is called Business Organization.
There is a number of factors which are required to evaluate before selecting a business organization and its registration, factors important for the selection of a business organization are:
• Nature of Business: Nature of business represents the core features of business and its current and future scope & growth assessment. For example: In small trading businesses, professions, and rendering of personal services; sole proprietorship is a natural choice for the persons who want to start any business activity. Same way when we speak about start-ups, Sole proprietor shipper dominantly occupies our mind.
For instance, businesses like Laundry shop, beauty parlors, repair shops, small tea/coffee shops small retail shops, painters, tailoring shops, shoe repair shops etc for these business activities sole proprietorship registration is most suitable if the scale and aim are small. But it’s important to note that the partnership is also suitable for all these businesses when the scale of business is slightly higher than the sole proprietorship and there are more than one owner who wants to start the business together.
At the same time the partnership firms also have an advantage in the case of medium scale manufacturing units. Even for real estate, medium-scale restaurants people like the form of partnership.
When a person wishes to start a business with a separate legal status for his/her business with having all the features and characteristics of their sole proprietorship and control it’s suitable for them to form a One Person Company(OPC). OPC is a new concept and a combination of Sole proprietorship and company.
Another alternative form of business is Limited Liability Partnership(LLP) where two or more persons are engaged and involved in carrying out their business under the Limited Liability Partnership Act 2008. It’s popular nowadays because of the limited liabilities of its partners and the liabilities of the LLP lies with the entity & do not fall on the shoulders of individual partners, unlike the partnership firm.
The nature of Business is one of the biggest factors before selecting an organization for registration.
The scale of Operations: Another factor that affects the form of business is the range of its operations. If the range or scale of operations of the business is too small, one must choose OPC or Sole proprietorship; if the operation or the activity level range is medium, which means the firm is not too small nor too large- partnership or LLP are the most preferable choice; whereas, in case of large scale operations, company form is beneficial. The market area and future expansion of the market areas are also very important factors in determining the scale of business and thus the choice of business organizations.