Things to Know About Business Enterprises:

Depending on the nature of an enterprise, an enterprise will be conducted through various legal persona, being:

Sole Proprietorship

A sole proprietor is a person who conducts business for his own account, on his own name and may do so in his name or a trading name. A separate corporate identity does not exist and the assets of the sole proprietor are exposed to the business risks associated with his business. Furthermore, the maximum tax rate applicable to a person trading as a sole proprietor, is higher than that of a company, close corporation or business trust. The administration of a sole proprietorship is however less onerous and is not regulated to the same extent as a company, close corporation, partnership or trust. This form of enterprise is suitable to a person starting up a new business or a small business, which does not generate a large profit.

Partnership

A partnership is similar to a sole proprietor, except that two or more partners usually pool their abilities and capital. As with a sole proprietorship, the partnership will carry the full risk of failure which, in turn, may result in the sequestration of their personal estates.

A Company and Close Corporation

A company and a close corporation cater for the needs of various entrepreneurs who wish to obtain the advantages of legal personality. Registration of a company or a close corporation endows such body with separate legal personality, and as such it can acquire its own rights and liabilities. The risk carried by the shareholders and directors extend no further than the loss of the amount which they have contributed to the venture as capital. An additional advantage of a company or close corporation is the benefit of perpetual succession. This means that the continued legal existence of the company or the close corporation is not influenced by any change in membership.

Public and Private Companies

A public company is a company registered with the JSE and whose shares are generally actively traded by members of the public. A public company is generally regulated by the Rules and Regulations of the JSE. A private company is aimed at the smaller enterprise which does not rely on public funds and a greater number of South African companies are presently private companies.

Business Trusts

Business trusts are managed and controlled by the Trustees, for the benefit of the beneficiaries. A business trust can be a useful tool in income and estate planning, and in order to ensure protection of assets. A business trust, or any trust for that matter, is largely a creature of its own making. The provisions of the trust deed regulate the administration of the trust. A business trust can be used by an enterprise, in conjunction with a company and a trust can hold shares in a company.

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