A business undertaking maybe 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. The main characteristics of a business undertaking are as follows:

(i) Separate identity:

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Every business undertaking has its own identity. It has a distinct name and separate existence. Its assets and liabilities are separate from those of other undertakings. It maintains its own books of accounts

(ii) Independent ownership:

A business undertaking has an independent unit of ownership. Its owners may be an individual, a group of persons or the Government.

(iii) Independent Management:

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The form of organisation and management of an undertak­ing depends upon its nature, 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.

(iv) 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.