Unit- 3
Sole Proprietorship
A Sole Proprietorship is the most simple type of business to start . It belongs to only one person. The owner can hire his/her staff and takes responsibility for all capital needed (like machinery, startup costs or raw materials). The owner also accepts all profits and debts incurred.
Sometimes the individual uses his own name in the name of the business e.g. "Jones Auto Repair."
Partnership
Groups of people who agree to combine their capital, labor and resources towards some common goal [usually profit]. It may have 2 to 20 members. Attorney to draw up the contract between the partners ,the contract should state what contributions each member has made, how the profits will be divided and many other aspects within the partnership. Jointly responsibility for debts incurred by other members.
Franchising
Is something of a halfway house, lying between entrepreneurship and employment Is a system of distribution that enables the supplier ( franchiser) to arrange for a dealer( franchisee) to handle a specific product or service under certain mutually agreed upon conditions Franchiser is company which has developed and thoroughly tested its business methods and has decide to increase the size of the business by offering individuals, the franchisees. the right to trade under its business name.
Benefits of Franchising
Management training and support Brand name appeal Standardized quality of goods and services National advertising program Financial assistance Proven products and business formats Centralized buying power Site selection and territorial protection Greater chance for success
Drawbacks of Franchising
Franchise fees and profit sharing Strict adherence to standardized operations Restrictions on purchasing Limited product line Unsatisfactory training programs Less freedom
REGISTRATION
Registering Your SSI Unit The main purpose of Registration is to maintain statistics and maintain a roll of such units for the purposes of providing incentives and support service
SSI Registration
Small Scale and ancillary units should seek registration with the Director of Industries of the concerned State Government.
Benefits of Registering
The registration scheme has no statutory basis. Units would normally get registered to avail some benefits, incentives or support given either by the Central or State Govt. The regime of incentives offered by the Centre generally contains the following: - Credit prescription ,differential rates of interest etc. - Excise Exemption Scheme - Exemption under Direct Tax Laws. - Statutory support such as reservation and the Interest on Delayed Payments Act.
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- Unit applies for PRC in prescribed application form. No field enquiry is done and PRC is issued.
- PRC is valid for five years. If the entrepreneur is unable to set up the unit in this period, he can apply afresh at the end of five years period. - Once the unit commences production, it has to apply for permanent registration on the prescribed form.
Application Formalities Required: Application Copy Of PRC Detailed Project Report Documents Relating To Qualifications
Basis of Evaluation
The following form basis of evaluation: - The unit has obtained all necessary clearances whether statutory or administrative. e.g. drug license under drug control order, NOC from Pollution Control Board, if required etc. - Unit does not violate any locational restrictions in force, at the time of evaluation. - Value of plant and machinery is within prescribed limits. - Unit is not owned, controlled or subsidiary of any other industrial undertaking as per notification.
De-Registration
A Small Scale Unit can violate the regulations in the following ways which will make it liable for deregistration:
1 - It crosses the investment limits. 2- It starts manufacturing any new item or items that require an industrial license or other kind of statutory license. 3- It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.
Arranging for:Land/ Shed:1. Choosing a suitable industrial site 2. Ready industrial shed on Rent / on ownership basis 3. Land for the project is taken from the State Industrial Areas Development Board (Pvt. Land can be taken
with all necessary formalities completed)
Infra Structure
SWAs Single window agencies At district level n Provides clearances for various infra. The main infra required are:1. Land or shed for project 2. Power connection- Power Tariff, Nearest Substation, Quality, Duration.. 3. Water supply 4. Connectivity to nearest rail, road or port
1. Term loans
For fixed asset Can be availed from the State Financial Corporation or from commercial banks Extent of the loan- Depend on Project Cost and Entrepreneurs background. Repayment in 5- 8 years ,based on estimated cash generation and profitability of the project.