Forms of ownership
Formation according to South African law
procedure some
businesses have to be registered while other do not require a formal
formation procedure
legal persona if the law requires the business to be registered it
means the business becomes a separate legal person from the
owner The legal person either owner or business enters contracts will
sue or be sued if the contractual stipulation are not adhered
o
Continuity of existence thin mean that the business exists as an entity and
unctions independently of the owner if the owner is no longer
present the business is not affected
imited liability this means that the owner is not allowed to use
heir personal belongings to repay the debt of the business This
a result of the business becoming registered as a separate
egal person
if the business is not registered the owner has unlimited liability
, Sole trader
t business that is started and owned by 1 person
This person doe
ot register the business as a separate legal entity This doesn't mean
hat there is only 1 person but that one person who started
le basinet has given all their capital and recieve all the profit
There are no formation procedures
The owner is the legal entity and ha to enter into contracts in
their own name Owner carries all the risks
The business has no continuity of existence
Owner has unlimited liability for debts
The owner can make quick decisions and this affords them flexibility to
capitalize on different opportunities
Bouncing off idea discussions of problems will not occur a the owner manages
the business on its own
Partnership
a business where 2 become of the
or more people joint owner
business They will usually share capital contribution profits and losses
sing a predetermined ratio The business is not registered as a separate
egal entity from the owner
there are no legal requirement for the formation procedures A partnership
agreement may be entered into writing but it isn't a requirement
cording to the law If there is a
disagreement the matter may need to
e settled in a court of law
Formation according to South African law
procedure some
businesses have to be registered while other do not require a formal
formation procedure
legal persona if the law requires the business to be registered it
means the business becomes a separate legal person from the
owner The legal person either owner or business enters contracts will
sue or be sued if the contractual stipulation are not adhered
o
Continuity of existence thin mean that the business exists as an entity and
unctions independently of the owner if the owner is no longer
present the business is not affected
imited liability this means that the owner is not allowed to use
heir personal belongings to repay the debt of the business This
a result of the business becoming registered as a separate
egal person
if the business is not registered the owner has unlimited liability
, Sole trader
t business that is started and owned by 1 person
This person doe
ot register the business as a separate legal entity This doesn't mean
hat there is only 1 person but that one person who started
le basinet has given all their capital and recieve all the profit
There are no formation procedures
The owner is the legal entity and ha to enter into contracts in
their own name Owner carries all the risks
The business has no continuity of existence
Owner has unlimited liability for debts
The owner can make quick decisions and this affords them flexibility to
capitalize on different opportunities
Bouncing off idea discussions of problems will not occur a the owner manages
the business on its own
Partnership
a business where 2 become of the
or more people joint owner
business They will usually share capital contribution profits and losses
sing a predetermined ratio The business is not registered as a separate
egal entity from the owner
there are no legal requirement for the formation procedures A partnership
agreement may be entered into writing but it isn't a requirement
cording to the law If there is a
disagreement the matter may need to
e settled in a court of law
