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CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Ravi and Meena want to run a small bakery in Pune together. They want the simplest form with no separate legal entity, sharing profits as per an agreement between them, and with each partner personally liable for the firm's debts. Which form of organisation best fits these needs?

A partnership firm fits best because it is formed by an agreement to share profits, has no separate legal existence from its partners, and makes each partner personally liable for the firm's debts, unlike a company or One Person Company.

  1. APrivate limited company
  2. BPartnership firmCorrect
  3. COne Person Company
  4. DHindu undivided family business with a Karta only

Explanation

A partnership firm is formed by agreement between two or more persons to share profits of a business, and it has no separate legal personality from its partners. Partners are personally liable. A private company is a separate legal entity with limited liability, and an OPC has only one member, so both are wrong.

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