It is a type of corporations the capitals of which belong to the private parties. Personal or group capitals are the sources of these corporations and their main purpose is to learn profits.
They can be categorized into four kind namely incorporated companies, firms, limited partnerships, and limited liability companies.
It is the simplest form of the private-owned companies. You should carefully study the description below to a further understanding.
1. Definition of Incorporated Companies
They are companies which have been established, owned and lead by someone. Therefore, he/she become the leader and the owner of the companies.
2. Capital Sources
Their own capital sources are derived from the owners assets or from the loans. Therefore, the owners have been responsible for his/her loans.
To establish a company someone must ask the regional government for the permission.
4. The Owners Assets
The owners of the companies have two kinds of assets. They are personal assets and the companies assets. The personal assets are used to fulfill the owner’s household while the companies assets are used to manage his/her companies. In running the companies business the owners should be able to separate their personal assets and the companies assets. For, they are used to calculate profits and the companies tax.
5. The Owners Responsibility
They have unlimited responsibility in running the business. It means that if the companies fall into bankruptcy, the owners will take their own assets to pay the debts.
6. The Advantages of Incorporated Companies
There are some advantages of the companies as the follows.
- It is easy to establish.
- The profits belongs to the owner.
- The guarantee of the companies secret.
- The owner is free to determine his/her own policy.
- It is easy and quick to make decisions if the owner faces some business problems.
7. The Weaknesses of Incorporated Companies
There are some weaknesses as the follows.
- The unlimited responsibility of the owners.
- The limited capitals derived from one’s assets.
- Because of depending on one’s assets the companies last unsecured.
- The limited management ability.
The kind of companies is suitable for any production fields such as farms, livestock, fishery, handicrafts, and trades. Mention some Incorporated Companies around your residence!
The firms is one of kind private-owned corporations. On order to know about firm, described as the following.
1. Definition of Firms
They are a partnership of two persons or more who establish a company using one name and all members are responsible for the company.
It is free to choose the name of the firm but it is usually derived from one name of the members. For instance, the firm founded by Gunawan, Mustofa, Harahap, and Mahendra was named “Mahenda Firm”. All members of the firm become the owner, the leader, the director, and the manager.
2. Capital Sources
The capital are derived from all members of the firm. The capital loans become the members responsibility. Therefore, if one of the members borrows some money in the name of the firm, he/she have to tell the rest of the members. Since one members act using the name of the firm binds other rest of the members.
The firms are established with some notary documents. The name, the address, and the occupation of the members, the name of the firm, the numbers of capitals and the name of the endorses to sign the document are listed on the notary documents.
The members of the firm should know each other well or they belong to a family.
4. Members Assets
In running the firm business, the members should separate between their own assets and the firm assets. This separation means to avoid corruptions from other members and to calculate profits and taxes.
5. Members Responsibility
Every member has unlimited responsibility. It means that if the firm is in a great debt, all members are responsible for paying it.
6. The Advantages of Firms.
There are some advantages of firm as the follows.
- The firms last securely.
- Able to collect bigger capitals.
- Better management from the division of duties.
7. The Weakness of Firms
There are some weaknesses of firm as the follows.
- The members responsibilities are unlimited.
- It takes much time to solve the problems in a firm.
- Different opinions among the members are possible to happen.
- The loss caused by one member becomes the whole members responsibility.
The use of firm (Fa) is usually placed in front of the name of the corporations, “Fa Mahendra” for instance. Today there are some other names of firms the abbreviation of which is placed after the name of the corporations such as Companies (Co) and Brothers (Bross), for instance Mahendra & Co or Mahendra & Bross.
The firms are suitable for running some middle companies which have no great deals of risks. Mention some firms around your residence!