Fill in your details below and one of our friendly consultants will call you back as soon as possible.
  • This field is for validation purposes and should be left unchanged.

Follow us on Twitter

  • #AwesomeAccounting - Always keep your eyes on your costs! Frugal businesses are profitable businesses. https://t.co/BuVzZ68fsK 3 hours ago
  • #FridayFun - What's the one thing you can't do without during your work day? #lovecoffee https://t.co/JZPYsR1Z8n 6 hours ago
  • RT  @ProcessMechanic : When start/started your business, did you take into account the sort of lifestyle you want to live alongside growing y… 16 hours ago
  • RT  @uctgsbsolutions : "The Solution Space Philippi hub is the first community hub to be established by UCT in its 178-year existence." - Pro… 1 day ago
  • #AwesomeAccounting - We're 20 days into #taxseason2017, read our blog ➡️https://t.co/ApsUOQDHU5 & get prepared 🤓 https://t.co/IliEeVuL7n 1 day ago
  • #ThursdayThoughts - There is only 1 way to get ahead in life - add an action component to your dreams! https://t.co/GBKze09hJR 1 day ago
  • RT  @Seedstars : Deadline EXTENDED: FinTech Startups can still submit an application for  @bbva  Open Talent 2017 till FRIDAY:#FinTech https://… 2 days ago
  • RT  @ABANAngels : Why African entrepreneurs need to think bigger  @GuardianNigeria  https://t.co/m8N5HPTKJu 2 days ago
  • RT  @TyronneNel : Have to agree,  @Phezulu_Group  is a focused #SME accounting solution- check them out https://t.co/ykjTbw2Lu4 2 days ago
  • #AwesomeAccounting - Affordable monthly business management & accounting services 4 SME's are not a myth -… https://t.co/uNjzCbaZje 2 days ago
  • #WednesdayWisdom - If it's important you'll make time to do it, if not you'll make excuses! So, what is it....... https://t.co/7Xtupl8W0k 2 days ago
  • #TuesdayTip - Remain curious, remain passionate - it's what creates a great #entrepreneur. https://t.co/hwxlALhbn0 3 days ago
  • RT  @HeadHonchoSA : INTERN WANTED 📣 Our  @6th_Ave_Group  fam are in need of an intern! If the requirements best describes you, drop them a mail… 4 days ago
  • #AwesomeAccounting - #entrepreneurs personal tax is linked 2 the companies they own, appoint somebody who understa… https://t.co/AiE2afYZFo 4 days ago
  • Well done  @Edge_Growth  a really positive development in your history https://t.co/CY04LsyIE2 4 days ago
  • #AwesomeAccounting - Didn't realise that affordable business management & accounting still existed? chat to… https://t.co/jRcJ6FT1t3 4 days ago
  • #MondayMotivation - For #entrepreneurs it's our passion that gets us up, but it's the coffee that keeps us going 😉 https://t.co/0J18wylYln 4 days ago
  • RT  @YALI_SAfrica : "Have an accountability partnership as an entrepreneur "  @AwethuProject  5 days ago
  •  @FMFSouthAfrica  Government's role is to improve efficiencies in the services it provides & then to reduce these ser… https://t.co/EEwFhv217B 5 days ago
  • RT  @FMFSouthAfrica : Rand: The government was set to protect man from criminals; the Constitution was written to protect man from government 5 days ago
 In News

How to choose a Business EntityPhezulu is passionate about assisting small and medium businesses, therefore the articles we produce for this blog series are based on the business life cycle of a typical entrepreneur. Entrepreneurs come in all different shapes and sizes but the one thing we do all have in common is the legislative hurdles that we need to clear to legally remain in business. We have purposely used the word “legally” here because it is possible to be in business illegally, and by this I don’t mean you’re in the business of criminal activity, you may just be conducting a legal business but going about it in the incorrect manner.

The first thing most entrepreneurs do is formalise the structure under which they plan to conduct their business. There are several different types of business entities you can choose from when you wish to get started in business. We will focus our articles on the most common ones:

  • Sole Proprietor – this is the simplest form of entity as you require no forms to set it up and you can begin any time you choose. A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. The proprietor owns all the assests of the business as well as all debts. This means that the owner has no less liability than if they were acting as an individual instead of as a business
  • Close Corporation – while it is no longer possible to register new corporations, any existing corporations are still legal and will operate as normal. A close corporation is generally a smaller corporation and is entitled to operate without the strict formalities normally required in the operation of standard corporations.
  • Private Company – a company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company. This is a business structure for entrepreneurs to run their business with no limit on the number of directors. Under the new Companies Act, private companies have become the new standard for business- changes to the law have made their operation easier and cheaper. Registered private companies are granted Proprietary Limited or “(Pty) Ltd” status.
  • Personal Liability Company – these are mostly used by professional partnerships, such as Doctors, Lawyers, Engineers and Accountants, as a minimum of one director is required. The Personal Liability Company and its directors, past and present, are jointly liable for any debts and liabilities incurred. Registered personal liability companies are granted Incorporated (Inc) status.

 

The different entities listed above each have their own peculiarities and risk profiles, the entity you choose however is entirely up to you and the amount of risk you wish to bear.

A word of caution! Should your business have more than one shareholder, we would recommend you talk to a professional to assist you with technical issues like your shareholders agreement, memorandum of incorporation and secretarial duties.

Registering any of the above entities, except the Sole Proprietor, will require you to interact with the Companies and Intellectual Property Commission (CIPC). They are the record keepers and like most official bodies, they tend to make life a little more difficult than it needs be. While the private individual is more than welcome to visit CIPC and process their own registration, our experience has shown that they prefer to make use of a third party to do this for them. Registration with CIPC can take anywhere between five and twenty one working days, so make sure you have made allowance for this in your planning.

For assistance in registering your business structure, shareholders agreements, memorandum of incorporation and secretarial duties contact PheZulu Business Management on info@phezulu.net

 

 

Recommended Posts

Leave a Comment

Start typing and press Enter to search