Types of Business Forms in South Africa

A franchise is when the owner of a business grants a license for their business to a third party. This gives you the right to operate the business or distribute goods and/or services using the company`s name and systems for a fee. Now it is one of the most popular international fast food chains. Their popularity with new franchisees is linked to their extensive training and support to continue to ensure consistency in any business, no matter anywhere in the world. Personal Liability Companies (Inc.) – are business entities in which current and former directors may be held jointly and severally liable for debts and liabilities incurred during their tenure. This form of commercial enterprise is most often used for businesses by professionals such as doctors, lawyers, and accountants. For example, Joe Soap`s accounting firm, Soap, Smit and Sithole, Inc. Your needs and the needs of your business will determine what type of business structure is best for you. Feel free to switch between types as your business grows. LLCs merge many characteristics of a partnership with those of a traditional legal entity.

LLCs exist as separate legal entities from ownership, which may consist of one or more owners. This protects owners from personal liability for debts and damages of the business. Another benefit of starting your small business as an LLC is the tax flexibility it offers – LLCs can choose to be taxed as a corporation (twice) or as an intermediary corporation such as sole proprietorship or S Corps. The downside of forming an LLC is that the process is much more complex than that of a sole proprietorship or partnership, such as drafting and filing articles and appointing a registered agent. Who would this structure be best suited for? This structure is ideal for an individual start-up or small business where the owner assumes full responsibility for ownership and management. 1. Is your company registered in South Africa with the proper business registration documents? Usually the choice for most foreigners starting a business in South Africa. This type of corporate structure in South Africa does not include a ban on foreign ownership and requires only one shareholder and one director. LLPs are also held by two or more partners and benefit from a tax pass-on.

Although the partners of a LLP. are responsible for their own conduct, they are not personally liable for the conduct of other partners or for the debts and damages of the company. The main disadvantage of the LLP unit is that it is not available to all companies. They are usually exclusive to certain authorized professions, such as law or accounting. There are four main categories of corporations: sole proprietorships, partnerships, limited liability companies and corporations. Within these types, there are subtypes – general and limited partnerships, limited liability companies, and G&Cs. Finally, there are joint ventures that can be formed by temporarily pooling the efforts of one or more of the above-mentioned companies. Limited partnerships, like partnerships, are businesses owned by two or more people. You will also benefit from pass-through taxation. The main difference between LPs and PMs is the existence of limited partners who have limited liability only up to the amount of the capital they have invested in the company.

However, each limited partnership must have at least one general partner who has unlimited liability. One possible drawback of the limited partnership is that limited partners usually don`t have much control over the day-to-day running of the business – a difficult point for the responsibility-conscious partner with lots of ideas on how to run things. Investors can use a variety of legal business structures in South Africa, depending on the type of transaction and the associated tax and legal considerations. The most commonly adopted forms of business activity by foreign investors are private companies and branches. Transferring ownership is relatively simple to direct, it provides an effective way to ensure that management is maintained, and it can also be tailored to businesses of any size, whether they are starting or growing in an empire. Ideally, if the commercial company has problems, it goes to the rescue of the company, from where it is recovered or liquidated. The real estate company and the trust containing the assets continue to exist and the owner is fine, but if they signed a personal guarantee, it would be foreclosed. Like any other type of business structure, a public company has advantages, such as: A sole proprietorship is when there is a single founder who owns and runs the business. This is the simplest form of business unit because the business is not separate from the owner. While there are a number of advantages, there are also disadvantages to structuring your business as a limited liability company owner, such as: Have you come up with your idea, but aren`t sure which business structure is right for you? Registering a business is an exciting step, but also a big step. It`s a decision that needs to be carefully considered so that you make the best choice for you and your business.

Sole proprietorships are usually small sole proprietorships. As soon as they grow, partners join them or the company is registered as Pty Ltd. This means that a large proportion of global businesses were sole proprietorships at any given time, such as: The entity types described above may receive different tax treatment from the U.S. Internal Revenue Service (IRS) and a company`s state and local tax authorities.