Forms of ownership; single ownership

Forms of ownership

1. Single (sole proprietorship): One person owns and manages the business.
2. Partnership: Two or more persons share ownership (Partnership Act, 2020).
3. Joint stock company (private and public): Capital in shares; limited liability (Companies Act, 2063).
4. Co-operative: Owned by members for mutual benefit (Cooperatives Act, 2074).
5. Public enterprise (government ownership): For example NEA, Nepal Telecom (majority state-owned), Nepal Oil Corporation.
6. Others: Joint venture, non-profit organization, franchise, trust.

Single ownership

A business owned, financed and run by one person, who gets all profit and bears all risk. Examples: a corner shop, a clinic, a small cyber cafe. In Nepal it is registered as a private (sole proprietorship) firm under the Private Firm Registration Act, 2014, with the Department of Commerce, Supplies and Consumer Protection, a cottage and small industries office or the local government, and it obtains a PAN.

Advantages

1. Easy and cheap to start; few legal formalities.
2. Quick decisions by one person.
3. Full profit to the owner, giving strong motivation.
4. Business secrecy.
5. Direct contact with customers and flexibility.
6. Personal satisfaction and independence.
7. Easy to close.

Disadvantages

1. Unlimited liability: personal property can be used to pay debts.
2. Limited capital and borrowing capacity.
3. Limited managerial skill and one-man risk.
4. Uncertain life: ends with death or illness of the owner.
5. Difficult to expand.
6. Limited ability to hire and keep talented people.