---
title: "Forms of ownership; single ownership"
subject: "Organization and Management"
chapter: 4
key: "semester_7/organization_and_management:forms-ownership-single"
source: https://www.bctengineer.com/q/semester_7/organization_and_management/forms-ownership-single
site: BCT Engineering
---

# Forms of ownership; single ownership

Organization and Management · Chapter 4: Forms of Ownership

- Asked in: 2071 Shrawan, 4+4 marks
- Video: [Chapter 5: Forms of Business Ownership MGMT161C](https://www.youtube.com/watch?v=jdlZY8zBahA) — Kamryn Wiest
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/organization_and_management/forms-ownership-single
- Whole chapter: https://www.bctengineer.com/md/semester_7/organization_and_management/chapter-4

## Question

What are the forms of ownership? Explain advantages and disadvantages of single ownership organization.

## Short answer

Forms of ownership include sole proprietorship, partnership, joint stock company, cooperative, and public enterprise. A sole proprietorship (owned by one person) is easy to start with full profit and quick decisions, but has unlimited liability, limited capital, and uncertain life.

## Answer

#### 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.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Why is unlimited liability a major disadvantage of single ownership?
   A. The owner is liable only up to the capital invested
   B. The business cannot borrow from anyone
   C. Personal property of the owner can be used to pay business debts
   D. The owner must share profit with creditors
   Answer: C. Since the owner and business are one, creditors can claim the owner's personal property to settle debts. (Key point: Liability of sole proprietor)

2. What happens to a sole proprietorship when the owner dies or falls seriously ill?
   A. Employees become the partners
   B. It continues under the Companies Act
   C. Its life is uncertain and the business may end
   D. It automatically passes to the government
   Answer: C. Single ownership has uncertain life because the business is tied to the one owner. (Key point: Uncertain life)

3. Which advantage explains the strong motivation of a sole proprietor?
   A. Perpetual succession
   B. Capital from many shareholders
   C. Limited liability
   D. Full profit goes to the owner
   Answer: D. The owner gets all profit and bears all risk, so effort is directly rewarded. (Key point: Why owners are motivated)

4. Which form of ownership is owned by members for mutual benefit?
   A. Partnership
   B. Joint stock company
   C. Sole proprietorship
   D. Co-operative
   Answer: D. A co-operative is owned by its members for mutual benefit (Cooperatives Act, 2074). (Key point: Forms of ownership)

## Related in Organization and Management

- [Change in form of ownership](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Aownership-change-examples) — Organization and Management, chapter 4
- [Ownership and structure for software company](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Aceo-software-ownership) — Organization and Management, chapter 4

## Related in other subjects

- [Limitations of single bus system](https://www.bctengineer.com/question.md?key=semester_5%2Fcomputer_organization_and_architecture%3Asingle-bus-limit) — Computer Organization and Architecture, chapter 1, asked 2×