A business undertaking is an organisation which is engaged in some industrial or
commercial activity. It represents an institutional arrangement for carrying on any kind of
business activity. It may be owned and controlled by a single individual or by a group of
individuals who have entered into a formal or informal agreement to jointly conduct the
business.
Every business undertaking is a separate and distinct business unit. It has its own identity
and separate ownership. It can be distinguished from other undertakings on the basis of its
ownership, management and control.
According to Wheeler, a business undertaking is a concern, company or enterprise which
buys and sells, is owned by one person or a group of persons and is managed under a
specific set of operating policies”.
Thus, a business undertaking may be defined as an organisation operating under separate
ownership, management and control and carrying on any business activity with
independent risk- bearing.
All business undertakings are directly or indirectly engaged in the transfer or exchange of
goods and services for value. They deal in goods and services on a regular basis. Their
main motive is to earn profits and they are exposed to various types of risks.
Characteristics of a Business Undertaking
The basic features of a business undertaking are as follows:
1. Separate identity:
Every business undertaking has a separate identity. It has a distinct name and separate
existence. Its assets and liabilities are independent of the other undertakings. Its accounts
are separate from those of the persons who own it.
2. Independent ownership:
A business undertaking is owned by the persons who contribute its capital. The owners
may be private individuals or the government. Every business undertaking thus has an
independent unit of ownership.
3. Independent management:
The form of management of an undertaking depends on its nature and size and legal
requirements. But every business undertaking has its own independent management. The
management of one undertaking does not interfere in the working of other undertakings.
The management of each undertaking takes independent decisions concerning different
aspects of business.
4. Element of risk:
Every business undertaking involves risk. Profit is the reward for bearing risk. The risk of
an undertaking is borne by its owners though some of the risks may be covered through
insurance.
Types of Business Undertakings
Business undertakings may be classified into three broad categories as follows:
1. Private Sector Undertakings:
These undertakings are owned, controlled and financed by private businessmen. There is
no Government participation in them. The main motive of private sector undertakings is to
