15/03/2013
When deciding to run a business in your own name or in the name of a group, the sole proprietorship and partnership are the most common.
Sole Proprietorship: Comprises a relatively small business and with capital of only one person, the owner. Normally, the owner is also the manager and there is no formal requirements regarding the registration of such business entity.
Partnership: Is established by way of an agreement between two or more partners. The partners conduct business as a partnership in their own combined names, or in a name of their choice. A partnership does not have a legal identity and as such dissolves on changes in partners. The agreement regulating a partnership can be verbally, but it is required that it be written and it is advisable that a legal practitioner draft such an agreement. Please note that with both the Sole Proprietorship and Partnership, the liabilities accrued by the business are also the liabilities of the owner or partners. The owner of partner’s personal estate could be in jeopardy in the event of the business having financial trouble.
Close Corporation: Is established when on individual, or more (up to ten maximum), called members, registers the founding statement of the close corporation. A close corporation needs to have an accounting officer, which is registered as such with a professional association. The Close Corporations Act also directs that a cc must have a registered office where all accounting records, a copy of the founding statement and a close corporation register must be kept. Members must also be issued with member’s certificates stating their percentage of the member’s interest. We attend to the aforementioned obligations automatically.
Private Company (Pty) Ltd: This is also a popular form but is more expensive to incorporate and upkeep. A private company is formed when one or more members (which may be individuals or legal personas) register a memorandum- and articles of association with the Registrar of Companies in compliance with the Companies Act. A company must haven an appointed qualified auditor and its books must be audited annually. All relevant documents and accounting records must also be kept at the registered office. Please note that when registering a cc or company, it is important to exactly establish the formal requirements and statutory obligations as per different Acts.
