Sudershan has undergone skill development training for maintenance of electronic items, from an institute started under the ‘Skill Development Mission’ by the Government of India. He wants to start his own small business in his locality with<1,00,000 given by his father as capital. He himself wants to manage and control this business, employing some assistants, if required. Out of the following, suggest the form of business organisation he can adopt:

Question

Aruna, passionate about baking, opened a bakery shop. She borrowed ₹50,000 from her father and took a loan of Rs. 1,00,000 from a bank to start the business. To attract customers, she set the prices too low. Later, she noticed that the revenue earned was not enough to cover the costs. When the loan became due, she was unable to pay. The bank recovered the loan from Aruna’s personal assets, including her savings and property. Can Aruna’s personal property be called upon to pay her business debts? Give reason in support of your answer. State the feature of sole proprietorship highlighted in the above case.

Answer 1

Sudershan seeks to establish a small business with an initial investment under Rs. 1,00,000, and intends to manage it independently. This profile aligns perfectly with a Sole Proprietorship, a business structure owned and run by a single person.
Sole Proprietorship: Ideal for entrepreneurs with limited capital, a preference for complete autonomy, and a need for straightforward establishment.
Partnership: Requires two or more individuals, contradicting Sudershan's objective of sole business management.
Private Limited Company: Entails higher legal compliances and a more substantial capital outlay.
Public Limited Company: Designed for large-scale enterprises with public investment; unsuitable for a localized, individual venture.Consequently, the most appropriate choice is (D) Sole Proprietorship.

The Correct Option is D

Solution and Explanation

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