Types of Companies

There are basically four types of business ...

In South Africa, there are basically four types of "company" or trading entity; the sole trader, the partnership, the close corporation and the Pty(Ltd) company. Let's deal with each in turn.

The Sole Trader
A sole trader is someone who carries on a business in their own name. They are not protected from risk and are personally liable for all debts and claims against them although they are taxed as individuals. Being a sole trader requires no formalities as other business forms do.

Partnerships
A partnership is where two or more people (up to 20 natural persons) agree to work together for the purpose of making a profit. Partners must each put something into the partnership and, like sole traders, have no protection from risk. Also like sole traders, they are taxed in their personal capacities.

The Close Corporation
The close corporation (cc) is a registered juristic entity that exists separately from the member or members that founded it (in the eyes of the law at least). It is taxed separately and offers its members some protection against risk. Only natural persons may be members of a cc and there can be a maximum of 10 members, although they can employ an unlimited number of employees. Close corporations must have an accounting officer appointed to handle their bookkeeping. The name of the company must end in "cc" on all legal and business documents.

The Private Company
Private companies (or (Pty) Ltd companies) have far more legal requirements than the other business forms listed above. They must be registered and must have an auditor appointed to handle the submission of the company's tax returns. The private company is owned by between one and 50 shareholders but is run by a board of directors. Natural or juristic persons can be shareholders in a company. There are other formalities as well, such as certain meetings are required and the name of the company must end in (Pty) Ltd.

For more information about these and other business forms, take a look at the following link;
Cliffe Decker Law Firm Website

If you want to register a cc or private company quickly and inexpensively, try Swiftreg


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