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| TYPES
OF BUSINESS ORGANISATIONS Once you have decided to start an own business you have to choose what type of business entity to use. The following overview should give you a first impression of the different possibilities. For further information contact us, our expert team will gladly assist you! Sole Proprietorship A sole proprietorship is a business that is owned by one individual only. It is the simplest form of business organisation. The business has no existence apart from the owner. The owner undertakes the risks of the business for all assets, whether used in the business or personally owned. Partnership A partnership exists between two or more persons. Each person contributes money, property or skill, and expects to share in the profits and losses of the business. A partnership must file an annual information return, but it does not pay income tax. Close Corporation The Close Corporation (CC) is ideally suited to small businesses because it is more simplified and flexible than a company. In contrast to a company, the CC act has been so designed that only an individual would be able to draft the papers and register the corporation by her/himself. The members of the close corporation need not have an active part. But usually the members manage the business at same time. Private Company A private company – (PTY) Ltd – follows the principle that it is a separate entity and acts in the same separately from its shareholders which are only liable with the amount of their shares. A difference between CC and company is that company’s shareholders may be individuals or corporate bodies. The director(s) is (are) directly responsible for the management and the administrative of the company in the day to day business. Trust A trading trust is a form of unincorporated business organisation which holds property and is managed by trustees. Trading trusts are not often used in South Africa today but may be expedient for several types of businesses, for example property development enterprises. The number of trustees of a trading trust is limited to twenty persons. Section 21 (non-profit organisation) A Section 21 company acts as "Association not for Gain". This company do not have a share capital. Its members undertake to pay a nominal amount (usually only a few rand) in the event of the Company failing or being placed in liquidation. The main object of a Section 21 company must involve: "promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests". The members may be natural or juristic persons. A Section 21 company must ensure that there are at all times at least 7 members. Due to the high popularity of CCs and Private Companies we focus on these both types in our following comparison:
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