 Hello, learners. I welcome you to this academic session of Krishna Kanta Handic State Upon University. In this session, we will discuss two topics. Number one is soldiered business and number two, Hindu undivided family. These two topics have been included in the first semester of BKAM program in the course business organization and business ethics. Let us first start with soldiered business. So learners, what we generally understand by a soldiered business? Let us begin with an example of a grocery shop nearby your house. Or you may take the example of a bookstore or a mobile repairing center. If you have observed these shops, whether it is a bookstore or a grocery shop, generally these are operated by a single person. When a business is operated by a single person, it is termed as soldiered business. In case of soldiered business, there is only one person, only an individual who looks after their business affairs. So the person who is the owner also manages the affairs of his or her business. So depending on the nature of the business, there may be different types of functions that the businessman have to undertake. So it may be purchase, sale, or providing some services. As we have said that in case of a mobile repairing center, the person is providing certain services. So all these firms which are operated or which are owned by a single person is generally termed as a soldiered business. So who is a soldier? The soldier is the owner of that business. He performs all the functions of the business. So he is the owner, he is the manager, he is the rich bearer, he is the financier, he is the manager of the business. He have to take care of all these activities in operating his business. So this is the soldier business and the soldier is responsible for all the functions of the business. So in case of managing a soldier business, the soldier though he is a single individual, he may take the help of the employees. But employees are not responsible for business profit or they are not responsible for the functions of the business. The ultimate responsibility of the soldier business lies with the sole trader. So he takes the help of employees but the ultimate responsibility rest with the sole trader for running the business. Now let us discuss certain features of soldier business. This will give you more insight what a soldier business is. Number one, no separate legal existence. It means the business soldier business is not required to form under any act. In case of a joint stock company, generally the company is required to be formed under the company's act but in case of soldier business, there is no such acts. A simple registration from the local bodies is enough to start the operation of the business. So we can differentiate the soldier business and the sole trader from a legal point of view. So in case of date of the sole trader, the business will also die as there is no separate legal entity of the business. Date or insolvency of the sole trader result in dissolution of the business. So second feature is capital contribution. We are aware that to start a business, we need certain amount of funds that is known as capital means the amount invested initially to start a business. So in case of soldier business, the capital is contributed by the sole trader. There is no other person who will contribute capital. Of course, the sole trader can borrow from bank or borrow from his friends. But as a contributor to capital, he is the only person who will contribute capital for the business. So let's come to the next point, management and control of the business. We have already discussed that the sole trader is the manager, owner, financier, risk bearer. So he has full authority. The sole trader has the full authority over the affairs of the business. The ultimate responsibility lies with him as well as he is the final authority. The SD final say regarding the business decisions, business operations. So the management and control of the business rest with the sole trader. Next is profit sharing. So capital is contributed by the sole trader. Business is run by the sole trader. So the profit will be only for the sole trader. There is no one who will claim a share in the profit. Employees will be paid salaries. But the profit of the business will be enjoyed by the sole trader only. As there is no other person, there will be no division of profit. And the sole trader can enjoy the full extent of profit earned by the business. Next point is liability. The liability of the business, liability of the sole trader is solely borne by the sole trader. His or her liability is unlimited. Unlimited liability means his personal assets liable for meeting the needs of the business. Suppose there is a sole trader business and the sole trader wants to close down the business. At a time of closing down, the liability of the business is Rs. 5 lakhs. And by selling the assets of the business, the sole trader can arrange an amount of Rs. 3 lakhs. The remaining 2 lakhs have to be paid by the sole trader out of his personal assets. So this is unlimited liability where the liability of the business extends to the personal property of the sole trader. Next important feature is stability. Sole trader business is highly unstable. In case of debt, in case of insolvency of the sole trader, the business also dies or become insolvent with the sole trader. As there is no other person to take the responsibilities of the business, the business dies or the business becomes insolvent with the debt or insolvency of the sole trader. So as compared to other forms of business, a sole trader business is less stable. Now let us discuss certain advantages of sole trader business. Only a sole trader business, though it is run by a single person, it has certain advantages. So first of all, easy information. A sole trader business can easily form. In case of a joint stock company, it is required to be formed another company's act. And that is why a joint stock company has a separate legal identity apart from its members. But in case of a sole trader business, there is no such act under which a sole trader business is required to be registered or required to be formed. Registration with the local bodies is enough to start the business. So it is very easy to start a business by a single person. Number two, maintaining business secrets. In case of a sole trader business, business secrets, business dealings can be kept secret because there is no other to share such information. The sole trader is responsible for all the business functions. So he can keep the business secrets to himself. And this gives a competitive edge to the sole trader business. Next is quick decision making. The sole trader is not required to consult with anybody in taking business decisions. So he can take quick decisions as and when the situation demands. In case of any market opportunities, he can easily take up those opportunities because he can make his judgment easily and quickly. Next advantage of sole trader business is managerial motivation. That means there is a direct relationship between the efforts and rewards. More you put your efforts in the business, more profits you will earn. So if you give more time, more energy, more finance, more managerial ability, then the sole trader will be able to earn more profit. So there is a motivation to earn profit and that motivation helps the sole trader to start and to run a sole trade business. Next is close relation between the customer and the sole trader. So the sole trader is the person who meet with the customers personally. He can understand customers needs and accordingly he can formulate his own business policies to deal with his customer base. So he directly deals with the customer, he gets an idea about the customers and accordingly it helps in earning profit or increasing his sales revenue. Next is healthy relations with the employees. So if a sole trader appoints some employees to manage his business, he can maintain a close relationship with the employees. This helps the sole trader in motivating the employees and the employees will also look after the business and accordingly they can run the business unit successfully. Then economy in management. As we have discussed, the sole trader is not required to appoint or not required to take decision by consulting with others. The sole trader can manage his business and therefore he is not required to appoint a manager for which he have to pay salary. He himself is the manager. So in this way he can save some managerial expenses, some overhead cost by minimizing the payment of salaries. So as there is no manager, the sole trader himself is the manager. So he saves the salary of the manager. These are the certain advantages and on that basis some people can start their own business that is in the form of sole trader. However, there are certain disadvantages also. So let us focus on the disadvantages of a sole trader business. First of all it is the limited capital. As we have already discussed, the capital required to start a sole trader business is generally contributed by the sole trader himself. So there are certain limitations on the sources from which the sole trader can bring capital for the business. So this limits the capital contribution for the business. So with limited capital, limited amount of fun the sole trader have to start his business. Then next one is limited managerial ability. The sole trader is the manager for his business. The sole trader is the financial of his business. Sole trader manages his employees. All these things are limited. A person cannot manage all the things efficiently. Business finance, management of human resource, marketing, selling, all these required expertise skill in business field. But as a sole trader the person concerned means the sole trader may have certain limitations. If the sole trader is unable to manage all the affairs of the business then it put restrictions on business success. Next disadvantage of a sole trader business is high business risk. As we have already discussed there is limited capital, limited managerial ability. The sole trader as a single person runs the business with high risk. Some business decisions that the sole trader has taken may prove wrong in the course of time. In that case the business may suffer loss. Any unfortunate events in the market or suppose there is sudden fall in the demand of a particular product then the sole trader may face loss due to loss of revenue of the business. Next limitation of the sole trader business is restrictions on business growth. So as a single person the person has certain limitations in expanding his business. Geographical expansion of the business is very difficult in case of a sole trader business. If the sole trader wants to oversee his business in two geographical locations then it is very difficult for him to present in the same locations at the same time. So there are certain restrictions on the growth of business. Disconomies of small scale operations. Thus sole trader generally operates on a small scale basis. It means he or she cannot purchase raw materials in large quantities. In that case he may forego certain advantages like discounts that is available in large scale purchase of materials. So sole trader business generally suffers from diseconomies of small scale operations. Then he cannot keep the stocks at a very large quantity because it involves costs, it involves space management etc. So all this leads to diseconomies. Let us go to the next disadvantage of sole trader business that is prevent bold decisions. The sole trader may sometimes face the undecisive situations where he is unable to take decision. Thus sole trader may be unable to think what is good or what is bad for his business, how his profits will increase or there is a risk in the business. So in that case the sole trader has no one to consult, he does not have any partner, any member. He himself has to take the decision. So sometimes it prevents the sole trader to take certain business decisions. This is the biggest disadvantage because the sole trader if he takes certain business decisions and it proves to be wrong then the liability rests with the sole trader. For business liabilities the sole trader have to bring his own resources, own property to meet the liabilities of the business. This unlimited liability of the sole trader prevents sometimes to take certain business decisions as we have already discussed. So this is all about sole trader business. Here we have discussed the concept of sole trader business means a sole trader business is generally started by a single person. That person is known as sole trader. He is the owner, manager, risk bearer, financer of the business. We have discussed certain features of the business, sole trader business. We have discussed the advantages and disadvantages of the sole trader business. So here we will begin the next topic that is joint Hindu family business. So this is another form of business organization. So let us first discuss certain important characteristics. A joint Hindu business family this particular form of business prevails only in India. So we will not found this type of business organization in other countries. The members of a joint Hindu family are the family members of that family. And next important feature is that the joint Hindu family form of business is recognized by the income tax act 1961. The next important feature is that it is controlled under the Hindu law, the joint Hindu succession act 1956. And for a joint Hindu family business it must have ancestral property. What is mean by ancestral property? It is undivided property passed from generation to generation. Let us suppose you are one of the member of a joint Hindu family business. In that case, the property on the base of which you are running a joint Hindu family business it must be undivided and it must pass from generation to generation. Suppose it's from your great grandfather, then to your grandfather, then to your father and then to you. So this is passing of the property, undivided property from generation to generation. And now you are managing the undivided property in the form of joint Hindu family business. So let us focus certain other features of joint Hindu family business. Number one, formation. To form a joint Hindu family business we require minimum two members. And the family must have ancestral property that we have discussed. Then it's membership. In case of joint Hindu family business,