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Forms Of Business Ownership

Deciding on what type of ownership is right for your needs can be a tough decision to make.

In order for a person to make the right decision, they would require the knowledge of the options available to them.

Below is a tabulated comparison between the five options of ownership available to new businesses or entrepreneurs.

The table compares the main points and aspects of each option.

	Sole Trader	Partnership	Close Corporation	Private Company	Public Company
Name	No specific requirements	No specific requirements	CC	(Pty) Ltd Propriety Limited	Ltd
No. of Owners	1	2 - 20	1 - 10	1 -50	7 - number of shares issued
Name of Owners	Owner	Partners	Members	Shareholders	Shareholders
Liability	Unlimited	Unlimited	Limited	Limited	Limited
Continuity	Limited	Unlimited	Unlimited	Unlimited	Unlimited
Managed By	Owner (does not have to physically be present)	All/some partners	All/some members	At least 1 director elected by shareholders	Minimum 2 directors, elected by shareholders
Capital	Contributed by the owner	Contributed or loans by partners	Contributed or borrowed by members	A maximum of 50 selected shareholders contribute the capital	Selling of share to the public
Formation	No requirements	Partnership Agreement (P.A)/ Articles	Founding Statement	Memorandum & Articles of Association	Memorandum, Articles of Association and a Prospectus
Payment to Owners	All profits paid to the owner	Divided between partners according to the Partnership Agreement	Paid according to % interest held by each member	Dividends per share depending on no. of shares	Dividends per share depending on no. of shares
Availability of Financial Information	Only available to the owner	Only available to the partners	Only available to members of the CC	Only available to shareholders & perspective shareholders	Info freely available to the public. Not confidential - involves many people
Type of Taxation	Taxed on owners personal capacity	Taxed on partners personal capacity	Pays Company Tax	Pays Company Tax	Pays Company Tax

Take the time to make a good choice for your business. Always get advice from business advisors or professional business brokers/advisors as you needs might be different or require more in depth researching.