Post 245 – by Gautam Shah
A designer operates more as a professional and less as an Industrialist, Trader or any other branches of commerce. The attitude to be professional arises from a desire to provide excellent services (professional) to a client. To work professionally a designer needs to have minimum distractions or encumbrances, including, for procurement, execution, material, labour and other logistics management. This attitude to design work has been formed from very ancient times. A well-documented design brief can free a designer from all other botheration. In the early period of painting work, artists use to create cartoons (full size representation on fabric, parchment or paper). Sculptors used to send clay or wax replicas to the site. Carpet makers, tapestry weavers, printers, all were given documented briefs as assignments from the ‘masters’. To handle large assignments, and simultaneously at several locations, one needs to divide them into jobs for various talents, technologies, and target dates. The documentation of design is as necessary as the professional distancing.
A Designer who works purely as designer, without any owned facilities of execution, production or supplies is a true professional, and many taxation laws recognize the classification. Many designers conduct supplying (vending), servicing and production facilities. From a taxation point of view, a designer as a Supplier or Vendor is classified as Trader (in many countries liable to pay Sales-Tax). A designer as a producer is considered a manufacturer, and equated with someone who operates an industrial establishment (even with temporary site-based work). As someone operating an industrial unit, the designer is liable to follow all applicable regulations. From country to country, and as per the local governments, the classifications and liabilities vary.
Pure design practices require a small setup, with very low capital outlays. Design and build type of set up have site-based facilities to save rents and transportation costs. But where sites are available for a very small period, entire production cannot be accomplished in a given time schedule. Some sites cannot accommodate or permit any production activity. A workshop or fixed production facility requires a heavy capital outlay, space, manpower and carry large overhead expenses.
Some Designers prefer to have their own production facilities. The production setups run by designers are of many types, a fixed-location type, or an on-site temporary and de-mountable type. A fixed facility may be used to produce prototypes, standard mass producible items or for job work. On-site facilities are for full scale production or for installation, erection, fitting of items produced elsewhere.
A professional Designer, who wishes not to be bothered with any infrastructure of practice, can still get a variety of jobs. One may work as a free lancer attached to other Designers. One can also work as an associate designer with other design professionals of parallel interest. One can find attachment as an in house designer with an industrial unit that needs design services.
Simplest Design Practice, is as an individual entrepreneur or proprietor. The designer as single owner is called the proprietor of the firm. The proprietorship has lots of flexibility of operations, including firm formation and dissolution. One may have few employees. It is usually small in scale and overheads are very low. Clients get a highly satisfying personalized service. A Proprietor gains directly in proportion to the input effort. There are few problems with single person businesses, such as when the proprietor is indisposed or dies, business abruptly comes to an end, unless someone has been trained and appointed a nominee to takeover in such eventualities. Proprietors resources are always limited and it cannot handle complex and time intensive (fast) jobs.
Partnership types of organization come into being for many different reasons: One person cannot operate a business when it becomes very large, complex or multi locational, Original entrepreneur of one man business setup, need to retire and gradually hand over the running business to a successor. Often new business comes into being by pooling of large resources and varied expertise of two or more persons.
Partnership type of organization can come into being through an informal mutual understanding, but better, if through a formal (registered with appropriate local authority) a partnership deed. Informal understandings can work if all partners are equal agents of their partnership. In reality, however, partnerships are unequal (in terms of resource input, capital investment, liabilities, gain share, physical labour and expertise input), so a formal deed is necessary. For taxation and often registration purposes, it is often necessary that partnership deeds should be formal (legally registered). An informally constituted partnership can be dissolved informally. But formally constituted partnerships can be dissolved through a dissolution deed, which generally specifies who bears the residual liabilities and gains. A partnership business cannot be called off (dissolved) on the spur of a moment. Certain gains and liabilities take years to be resolved. So as an easy way out partnership businesses can be sold to either others, (partnership or proprietorship firms) or one of the partners takes over the residual setup as a proprietorship organization.
A partner of a partnership cannot transfer own interest to another person at will, as consents of all partners are required. Every time a new partner is included or excluded, entire firm is recast and reformed. Partners bear full and unlimited liability, and all have to share the consequences of an action by any partner. Partnership deeds however well executed, all duties, responsibilities, liabilities of partners cannot be fully described, and there are always some leftover contentious issues.
A partnership firm can launch a small or limited purpose partnership firm. Here the mother partnership firm as a single entity enters into an understanding with one or more persons called associates to carry out specific tasks. As soon as the specific task or time schedule is over, the relationship comes to an end. Birth and dissolution of such relationship is comparatively easy, because the mother firm usually takes on all the residual responsibilities.
Partners always face the problem, how to share the responsibilities and liabilities. More often than not partners with monetary resource are interested in a safe income for their investment. Such persons do not wish to take on any other responsibilities. Often businesses are of very risky nature and people who join may wish to exactly know their involvement and limit their liabilities. A Joint stock company is an organization where such problems are not acute.
- JOINT STOCK COMPANY
For joint stock company, people with expertise, competence or resources invite select few (as a private limited setup) or any number of people (as a public limited setup) to invest by way of shares. A person who holds the largest number of shares technically runs the show. They may, however, allow an expert to run the business on their behalf. In joint stock company anyone who contributes for the firm gets compensated. The initiators through a share in the income, investors through an interest on the sum invested, and all others by way of salary or commission for the value of their labour, expertise, etc.