Steps In the Formation of a Company

Incorporation of a company undergoes a complicated procedure which is also time-consuming. It may take as long as one year's period. The formation requires many step to follow:

1. Getting Promoters Together: Those who form the company are known as promoters who must get together to work out the skeleton of the company. They must be at least seven for public company and two for private company. They are original shareholders and form the first board of directors.
2. Appointment of Advisors: Promoters appoint legal advisers who are expert in legal matters. They, under the guidance and instruction of promoters, prepare memorandum and articles of association, prospectus, and deal with the office of registrar of the company.
3. Preparation of Company Documents: The company law requires the preparation of certain documents in accordance with its provision before the company applies for registration.
4. Submitting Application with the Registrar: When spadework is complete an application for registration is submitted with the registrar of the company who is a competent government authority to grant registration.
5. Payment of Registration Fees: Along with the application registration fee is paid. The fee depends on the amount of registered capital.
6. Printing Share Certificates: After making an application with the registrar the promoter go to the press for getting share certificate printed. These certificates are issued to the shareholders as a token of their ownership in the company.
7. Issuance of Registration Certificate: Once the registrar is satisfied with all legal procedures, formalities, and documents, he issue registration certificate. On its issuance the company legally comes into existence. Private Company can start its business immediately after the receipt of the registration certificates. However, the public company cannot commence its business at this stage unless it gets another certificate known as commencement certificate.
8. Commencement Certificate: Even after obtaining registration certificate the public company cannot stat business unless it receives commencement certificate.
9. Publication Prospectus: On the receipt of the registration certificate the company issues prospectus to the public through advertisements. Prospectus is an invitation to the public to buy the shares of the company. Once the company raises capital through it the actual business starts. 

Correction of Invoice

Invoices occasionally may contain errors that include over-invoicing or under-invoicing. In case of such errors that following types of invoices are issued:

1. Debit Invoice : The debit invoice is issued under any of the following conditions:

• When a transaction has been omitted.
• The amount on the invoice is understand.
• If the packing materials including containers, canisters, or the like , the cost of which has not been paid, have not been returned. In this case the debit invoice is issued to demand of the buyer to pay extra charges for packing materials. The seller is bound to pay such a cost.

2. Credit Invoice: When a buyer has been over-charged or if some goods are found damaged the credit invoice is issued. In addition, if the containers, canisters or some other packing materials the cost of which had already been charged, have been returned, this invoice will be issued. Its objective is to make corrections and adjust the amount for refund. 

Objective of Proforma Invoice

Proforma Invoice is used under the following situations :

1. The amount mentioned in the invoices is the one which the buyer has to pay in advance of the delivery. Or the invoice may be sent along with the shipment. In this case the invoice amount is to be paid at the time of delivery.
2. When the seller decides that he must get the payment in advance he uses it. In the case of export the proforma invoice is presented to the custom authorities to enable them to assess the value of goods. On the ground of it import or export duty is imposed.
3. When the seller hands over the goods to his agent, the agent doesn't pay until the goods are sold. In this case the seller issues proforma invoices to the agent.
4. The seller may use it as a quotation form.
5. The proforma invoice may be issued along with the goods sent on approval. If they are accepted, the buyer will have to make payment in accordance with the proforma invoice. 

Proforma Invoice

The word proforma refer to "for form's sake". This type of invoice is issued to the buyer before the delivery is made to him. It contains such information as price, amount, packing, mail expenses, and discount.

If the amount of the order is less than the standard order of the company, additional surcharge is added and separately shown on the invoices

Invoice

It is the document issued by the seller to the buyer stating goods or services, quantity, rate, terms of sale, any taxation if any, etc. Term of sale included trade, cash and quantity discounts offered to the buyer.

What an Invoices is :

Invoices is a document used in business transactions. It is issued from the seller to the buyer. The following are the content of the invoices.

1. Seller's company name and address.
2. Date of the dispatch/shipment of the goods.
3. Receiver's (buyer's) company name and address.
4. Details of goods as brands, quality, quantity, or units, size, packing.
5. Price, rate, total amount.
6. Type of rate, F.O.B or C.I.F.
7. Commission or discount and its type, e.g trade discount, cash discount, or quantity discount. All types of discounts are deducted from the gross amount of the invoice.
8. Amount of insurance in the C.I.F.
9. In the case of foreign trade, the name of the bank through which the payment is to be made.
10. Mode of payment.
11. Term of sales.
12. Mode of delivery (railway, air, road)
13. Port of receipt.

Qualities of Good Businessman

A businessman must possess certain qualities if he has to stay in the market, no matter, how much capital or funds he owns. According to economist a business is survived if the input of four factors of production, viz, land labor, capital, and entrepreneur are in the best possible proportion. However, in discussing the qualities of a good businessman we will concentrate only on entrepreneur leaving other factors. The reason is that the successful use of land, labor, and capital wholly depends on the entrepreneur who is the organizer of the business. He must be creative, ambitious, able to work under pressure. He must possess risk-assuming courage. Not only should he satisfy his customer, shareholders,and employees but also he has to deal successfully with suppliers competitors, and the government.

Control on Business Cycles

Business cycles create economic oscillations; sometimes the economic activities get fast momentum but next time they slow down. Consequently, the economy becomes the victim of uncertainly and instability. Uncertainly leads towards unemployment due to which economic instability is bound to be created in a planned economy, through control on these oscillations, economic stability could be achieved.

Reducing Cost of Doing Business

Investor all over the world are interested to find out cost of doing business in a particular country before investing in any country. They look for wages and utilities expenses to make an estimate of cost of doing business. Labor wage in Pakistan are low but utilities are much too expensive. In china, electricity is free. In Pakistan, electricity charges are exorbitant for commercial purpose and the recent increase in prices for gas will not make improve.Cost if doing business must decrease to attract foreign investment.

Cartels

A Cartels has been defined as " an association of independent undertaking which enforce obligations as to the treatment of output and market, purchase, price calculations or trade terms and therefore, serve to influence the market against the working of free competition.
Through the production quota and price are controlled by the cartel, the units maintain complete freedom of internal management. Thus a cartel is a loose type of horizontal combination formed to eliminate unnecessary and wasteful competition and to secure economies of large scale distribution.

Pools

A pool may be defined as on Association for organization of business established through federation of various units whose member seek control over price by combining some factor in the price making process in a common aggregate and distributing aggregate among the units. The income of combining units may be aggregated, and after deducting the expenses of working the pool, the balance may be divided in a certain proportion. A pooling agreement is always make by member unity producing and dealing in similar products.
So pool is a business federation in which a member of business units combine in order to control prices and eliminate competition among themselves by regulating their total output market or income.

Mail Order Business

The world has now expanded in a way that face to face business become impossible. Development of communication has solved this problem. Communication and Mail services by air, sea and land have provided bright prospectus to business circles. For Instant, FAX is also a developed form of mail. Since recent past, introduction to business through catalogs, magazines and journals has been followed in all developing and developed countries. After having necessary introduction, orders are sent through mail. Products are sent and received by Registered Post. Various forms of mail are as such,play a prominent role in growth of business in present age. The latest mail services is e-mail through computer.

Franchising

Free Trade refers to that state in which there is no restrictions on the movement of goods between countries, placed a view to safeguarding home industries constitute the policy of protection. In the word of Adam smith, the term "free trade" has been used to denote " that system of commercial policy which draws no distinction between domestic and foreign commodities and therefore, neither imposes additional burdens on the latter, nor grants any special favors to the former. Free Trade, However, does not require the removal of all duties on commodities. It only insist that they shall be imposed exclusively for revenue and not at all for protection.

Training Division

The rapid industrilisation of a country demands a sufficient number of skilled labourers, many other under- developed countries, suffers from an acute shortage of this kind of labor force. After the work has been selected and hired for a job, he should be oriented with regard to his duties and company policies. He may need further training to increase his usefulness to the comaony. Even, if the workers are reasonably proficient on the job ther are gaints to be made from a contined training under a well palnned training program.

Inventory Control Division

The main purpose of inventory control is to see that the materials are properly received , stored , protected and issued to the concerned departments or sections as per policy of the enterprise. On recieving the materials they are entered in the Stock Register which is kept usually at the main gate of the Store Room. After making proper entry by the Store Keeper the materials are sent inside the Store Room at the place provided for them. There are seprate sections or areas for different items. There are clerks in those place who maintain bin cards and immediately enter in it and the material so received. When the Store keeper receive requisition, he issue instruction and slip to sectional clerks write diwn in bin cards maintained by them and a balance is made for the material in hand.

Planning and Routing Division

Planning is the part of production control that determines which materials and work are needed in order to produce the products ordered from the manufacturing division. Routing is the part of production control that determines which routes or path the work will take through the factory and where and by whome the procuring shall be done.

Recruitment and Promotion Division

One of the important consideration is personal policy is to devise and workout the way that would assure recruitment and promotion to deserving persons. It is because personal manager knows that one of the motivating factors for employees is an assurance for the better career for them. The hope for earning promotion on the basis of their competency makes the employees work with greater devotion and sincerity. They know that their prospect and fucture promotion lies in their sincere work. This hope creates in them the incentive and interest to work.

Effects of Devaluation

Devaluation lead to higher cost of imports particularly those of industrial raw material, spare parts, inputs for agricultural sectors, machinery, transport equipments defence equipments, main food items like wheat and edible oil. Consequently, the cost of production of domestically produced goods increased. Davluation also increased the burden of foreign debt and its servicing charges as well which, in turn, increased the cost of production for which such loans were extended, their prices increased.

Business Analysis

Business analysis involves study of pros and cons of the proposed product n the light of market demand firm's objectives, sales costs and profits as well as the capability to manufacture or produce the product within the stipulated period.

Joining The Large Business

Rewards, promotions, prestige, security are some of the maturating factors with a chance to move around various division and operatives, training and guidance and gaining wholesome experience are other preferable to join large companies for young and educated aspirants. But at the same time sense of insignificance, getting lost in thousands of employees, many policies and other such matters also play deterrent influence on them and thus make them move in the teeth of rivalry. competition and discord. Thus the task in large companies is full of dangers effects and defects.

Phases of Business Cycle

A trade cycle passes through the following four phases :

1. Recession:
Recession is characterized by the following:

• High level of general unemployment.
• Maximum fall in the consumers demand.
• Surplus production capacity (unused production capacity).
• Fall in the business profits.
• Fall in in the expectation about the future profits.

2. Recovery:
Following are the symptoms of Recovery:

• Gradual renewl of investments.
• Trend of increase in employment.
• Gradual increase in the consumption of the consumers.
• Increasing trend in the business profits.
• Creation of confidence in the business.
• Either price stability or slow increase.

3.Boom:
Boom is characterized by the following:

• Acceleration in the consumer spending.
• Maximum use of production capacity which creates shortage of labour.
• Production can be increased by labour saving methods of production only.
• Too much increase in the investment expenditure.
• Price increase due to increase in demand.
• Business profits on the highest peek.

4.Recession:
Symptoms of Recessions can be referred as under:

• Fall in the consumption starts.
• Suddenly the existing investments are felt non-profitable stopping the new investment.
• Fall in production.
• Decrease in the level of employment.
• Some business are ruined due to fall in the profits.
• Ar last recession is converted into the severe depression and so a business cycle completes its journey.