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Forms of business ownership, Unincorporated companies do not have a…
Forms of business ownership
Sole proprietorship
Not a separate legal entity apart from its owner
Cannot be involved in any legal relationship except in the name of its owner
Owned by one person
Not a seperate taxable legal entity
A company
As an incorporated entity, a company is a separate legal entity from the person who owns it
The owners, known as shareholders, own the company through ownership of the shares issued by it
Shareholders have limited liability meaning the obligation is limited to their investment in the shares of the company
Two types of companies
Private companies
May be formed and managed by one person who is the sole shareholder or director
Used in smaller companies
Public companies
Has to have at least one shareholder and three directors
Used for larger companies
Listed on the stock exchange
Profit and non-profit companies can be created up the companies act 2008
Profit company is incorporated for financial gain for its shareholders
Non-profit company is incorporated for public benefit
A Partnership
Not a separate taxable legal entity
Not a separate legal entity apart from its owners
Legal relationship which arises as a result of an agreement between two or more individuals but not exceeding 20
Close corporation
a corporation which is held by a limited number of shareholders and is not publicly traded.
Unincorporated companies do not have a separate legal personality.
Incorporated companies do have a separate legal personality