 It is comprising as an array of activities for

production , distribution & exchange of goods

& services
 Activities  Manufacturing ,
Trading , Commerce
 Scale  Micro , Small , Medium
& Large Enterprises
 Geographic Scope  Local , National ,
Multinational
 Markets  Natural resources ,
Equipments ,
Commodities , Capital ,
Labour , product
markets
 Stakeholders  Entrepreneurs,
Promoters , Customers
, Investors , owners ,
Directors ,
Shareholders etc
 Functions  Production ,
Operations, Marketing
,Finance
 Focus  Company wide ,
particular business line
, particular function
 Concerns  Survival , Profitability ,
Growth , Sustainability
, Social responsibilities
, Governance , Value &
Ethics
 Mode  Traditional , Physical/
Brick & Mortar , Digital/
online
 Underlying Disciplines  Economics , Laws ,
Philosophy ,
Psychology , Sociology
 BCK is vast (Local store , malls , online website)

 BCK is eclectic (multi-discliplinery) – it derives

from various fields like production , finance ,
marketing etc

 BCK is ever evolving & expanding - Business is

changing very fast , and way of doing business
has changed . Eg – OLA , Uber ,BMS ,Online
Trading , Banks
 Strategy
 Logistics
 Bulls
 Bears
 CA shall be able to conduct audit diligently
only when they understand the nuances of
business whose accounts they prepare or
audit
 All that we do to earn a living are economic
activities & rest are non-economic
 Economic activities are driven by rationality ,
what do I get in return , non-economic are driven
by sentimental or emotional or altruism
 Non-economic activities also have economic
dimension , i.e time , money & resources are
needed to make it happen , both initial
investment and expenses for day to day
operation & management
 Income Generating – There are 2 types of income earned and
property income . Everyone gets something for factors of
production . Land – rental , Labour – wages , Capital – Interest ,
Entrepreneurship – Profit
 Productive – Men can’t create anything , but they can transform
matter to create goods & services for satisfaction of others need
 Consumption is also economic activity – Only if there is demand
there is production , without demand there is no production
 Savings , Investment & Wealth – Unspent income is savings and
is in banks , mutual funds , stock market and corporate sector and
government borrow these savings for creating infrastructure and
other productive things
 Production for self-consumption/ Subsistence Production is not
business , it should be commercial production on large scale
 Business is production , distribution & trading of good & services
 Is Agriculture business ? If for self production – no , Under I.T Act –
Income is exempt , but yes if for others it is business , but things
produced from Agriculture that is Edible oil , mustard , coconut ,
soybean represents agro based Industries
 Business is usual occupation of creating ,owning & operating an
economic organization .
 Usual occupation means done regularly , if done infrequent it is
not business, thou in profit or loss . Eg – Sale of Furniture is not
business thou it is economic activity
BUSINESS PROFESSION EMPLOYMENT

Meaning Independent rendering of Rendering of services

Entire spectrum of market services of specialized under contract of
oriented activities nature based on employment for salaries /
containing industry , trade qualification under wages
& commerce professional body that
contains code of conduct
Mode of Establishment Membership & Certificate Letter of Appointment &
Your will & other legal of practice service agreement
formalities
Source of Livelihood Professional Fees Wages & Salaries
Profit

Prescribed Qualification Strictly Prescribed Min. required for that kind

None of job
Business Profession Employment

Ethical Guidance Employers codes

Founders values
Professional codes
Investment
Major Invt Some investment .Eg – None
office/ chamber
Personal Freedom
You are your own boss Quite a bit Not much

Certainty of Income
Least Quite a bit Most
 Job Creator , not seeker
 Provides momentum to economic growth
 Investment Intensive
 Gestation & uncertainties
 Systematic , organized , efficiency oriented
 Objective oriented / Purposeful
 Economic Growth is Increase in GDP
 What is GDP ?
 Value of Goods & Services Produced in a year
 Difference between Economic Growth &
Development ?
 Economic Growth is merely increase in GDP , Economic
Development is improvement in the quality of life of
people

 Difference between Business Person & Enterpreneur

 Entrepreneurs are better characterised by problem
solving , new opportunity , and doing things that are
creative and innovative
Economic Organic Social Legal , Ethical , &
Environmental
Sales , Profit , Survial , health Community service Respect for law in
Return on ,(age of assets , , education , health letter and spirit ,
investment , fitness of human , sanitation , fair practices ,
efficiency , resources , general heritage , transparency ,
economic value & capital reserves) conservation , truthfulness ,
added ( profits in growth , community support honesty . Green
excess of cost of diversification of during calamities usage & disposal ,
capital) capabilities and disaster lower emissions ,
effective waste
handling and
disposal ,
preservation of air ,
water
1. Interdependence. Business draws its factor of production
from society and is dep on sale of goods and services
2. Multiple Stakeholders
3. Amout of profit is not important , important thing is
staying in business
4. Primacy of customer – there should be value to
customer , even for Private Sector Customer Satisfaction
is more important than Profits
5. Performance – Greater the performance , more the
profits
 Business ownership is a bundle of rights –
Person has invested , so full profits are his
rights , he can transfer ownership by
succession after death and divide ownership
in business by registered will

 Owned Single or Jointly

 Business may be proprietary or corporate

concern
 Sole Proprietorship

 Hindu Undivided Family

 Partnership Firms

 Limited Liability Partnership

 Company
 Easiest and earliest form or business
 Economic hero of the organization
 One person band
 Enjoy people trust and provide personalised
services
 Unorganised sector of economy (75%)
 They are called local , working conditions are
poor , hire & fire policy , lack of employee
welfare , Fate is linked to well being of owner
 Autonomy of being one’s own boss
 Sole provider of Capital
 Visibility of owner & personalized services
 Sole bearer of risks
 Unlimited Liability
 Fate as a going Concern
 Succession of ownership
 They can transfer their share by will . If will is
not there , applicable law of inheritance will
come into force . Eg – Hindu Succession Act ,
1956
 In this group of family members come
together and form a business
 It enjoys separate status under IT Act
 They are business , so cannot earn income
from salary
 There are 3 generations in HUF , i.e
Grandfather , father and Grandchildren ,
these are known as HUF
 It includes hindu(buddhist ,jain , hindu , parsi
and sikh families)
 The main member who manages the
business is KARTA , his liability is unlimited
and all other co-parceners liability is limited
to their share in the business

 Any person who is born in family

automatically will get it’s share in HUF

 Share can be transferred by will or if there is

no will HINDU Succession Act , 1956 will apply
 It implies contractual co-ownership of
business between 2 or more persons who
agree to share profits of business .
 It is enforceable by law called partnership
deed which may be verbal or written .
 A Partnership cannot be formed for non-
business purpose . Business means every
trade , occupation or profession
 Deed is registered under Indian Partnership
Act , 1932
Even company can be admitted as partner ,
i.e Artificial person. Number of max partners
Banking – 10
Other Business – 20
Because in case of insolvency ,it is difficult to
trace partners

 Ownership cannot be transferred , a new

partner can be admitted , only with consent
 It has be to incorporated under LLP Act , 2009. The MCA is
the apex body for governance of LLP in India
 After registration it is separate legal entity and has name
life of it’s own different from that of it’s partners like
company
 It contains both corporate form as well as proprietary form
of business organization . In this there is limited liability ,
except if there is fraud by partners and business will
continue despite the death of partners
 It has be registered with ROC .There is no cap on
maximum no of partners
 There is also new thing that is One Person
Company .
 Company is registered under companies act
2013 , and it governs functioning of company
and regulation of capital markets is governed
by SEBI
 Company has to file AoA & MoA along with
application of incorporation. MoA spells out
objectives of company and AoA spells out
internal regulation
 Company has to do statutory audit and
publish its quarterly results for the
shareholders
Features Private Company Public Company

Members minimum 2 7

Maximum Members 200 No limit

Transfer of shares Restrictions are there No restriction

Minimum Directors 2 3

Committee such as CSR , No Yes all laws are strict

Audit Committee , BOD , because there is public
Nomination , interest
Remuneration