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CHAPTER 3: REGISTRATION OF BUSINESS ENTITIES :star:, Business Entity…
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Benefits
Sole proprietorhip
- Owner has 100% control of the profit earned from the business.
- Registering can be done by the owner herself.
- The cost of registering is low.
- managment is only the owner will make decisions.
partnership
- By having more partner , more money available for the business.
- Management of the business will be efficint because partners who have different knowledge and skills can share the responsibility in managing a partnership.
- Partners can share views in a decision-making situation and deciding on the best option.
Limited Liability Partnership(LLP)
- No limit on the number of owners that can be involved with the business.
- It is in inexpensive to register (LLP) compared to private limited company.
- Each individual partner must file a variety of different tax forms regarding the business.
- Each partner has the ability to decide the amount they want to contribute
Pivate Limited Company (PLC)
- Organization structure is more systematic because assisted by a group of workers paid according to their skills and capabilities to manage the company.
- A private limited company enjoys good value in the market.
- Allowing wide legal capacity and can own properties without any limitation.
- Private companies can raise capital from individuals.
Cooperative
- Formation of a coopertive society is very easy.
- People with common interest can form a cooperative society (Any competent person)
- Members of consumers control their own supplies through cooperatives.
- A cooperative society has a fairly stable life and it continues to exist for a long period of times.
Limitations
Sole Proprietorship
- Capital is limited to the ability of the owner.
- if problem encountered are complex , the decisions might difficulty.
- The owner will be held directly responsible for any losses , debts coming from the business.
- The business does not continue if the owner becomes deceased.
- owner must pay self-employment taxes.
Partnership
- The liability of the partners for the debts of the business is unlimited.
- Partners must pay tax in the same way as sole traders.
- Partners share the profits equally if there is no partnership agreement prepared.
Private Limited Company (PLC)
- The process to register the company is quite consuming and needs individuals who are in law practice.
- High cost which involves registration fees.
- Company taxes are compulsory to be paid to the government every year.
Limited Liability Partnership (LLP)
- There are large tax limits on limited liability partnerships.
- Due to the tax benefits and tricky workings of an LLP , some parties do not recognize LLP as a legal business.
- Corporations gain much more respect and are generally more successful than LLP.
Cooperative
- The amount of capital that a cooperative society can raise from members is very limited because the membership is generally confined to a particular section of the society.
-Every cooperative society is formed to render service to its members rather than to earn profit.
-Cooperative societies are formed with the idea of mutual co-operation.