Case Companies Act - How proprietor has unlimited liability in business ? Video link - https://youtube/watch?v=XGaZkV8aYmw Solution - By Amlan Dutta You see i am the owner of Filing Returns Online ...i provide consultancy services ...for me to resgister myself as a propietor business , i dont need to register or do some crap business I simply need to apply for tax certificate ....since consultancy is a service , i apply for Service tax Registratation (ST1 ) and get my ST registration done Thats it , now i am doing propietorship business Now say , i have capiatl worth 50000 Rs cash and another 50 k in laptop and other electronic accessories Pleased with my work , there is this Afganishtan Guy who networks with me and tells me great prospects of working together He promises orders worth 6000 Cr and even sends me 2 Cr in advance I immedaitelty decide to expand , make offices , etc etc ...so i take loan from SBI for say 20 Crores Now, i just had invested capital of 1 lakh(cash and assets ) Somethings happens and the afghanistani businessman doesnt resurface again ....i am shattered , i get no other business and everythin i touch becomes copper instead of Gold So , i go bankrupt ....now SBI money taken 20 Cr is my debt and there may be other liabilities ... My business now has no capital left to meet this liabilities However , my personal assets like my 12 restaurants,my BMW , my mercedes , my clubhouses loicated at different parts of the world ,etc if sold can fetch this value In a propietorship business , the personal assets are also at stake to meet the liability In a company Limited , the owner would be responsible only till the extent of the invested capital Howver in a propietorship business because the owner and the business are not separate entities , so the liability is unlimitedb Si , i am now responsible for all the liabilities of the business This is what is meant by Unlimited liability in a propietorship business Books confused you , right . they confused me as well ....go out and party now for you know something better than your contemporaries Humble regards , Amlan Dutta
Posted on: Mon, 16 Jun 2014 16:32:06 +0000
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