A type of business entity owned and run by one individual – no legal distinction between the owner and the business. Sole Proprietorships are the most common form of legal structure for small businesses. The formation of a sole proprietorship is the simplest way of doing business. The costs are low, and very little formality is required.

A general partnership is a business association created with little formality between two or more people seeking a profit. Because the association involves more than one partner, an agreement should be initiated. A partnership agreement stipulates the partnership’s terms by formalising rules for profit and loss sharing, ownership percentages, dissolution terms, and management rights. The formation is easy to create, but it is essential to have an attorney draw up the partnership agreement.

A private company, Pty (Ltd)or proprietary limited company is a separate legal entity and is independent from its founders. The owners of a Pty (Ltd) are also known as the shareholders. The advantage of a Pty (Ltd) is not being answerable to anyone regarding your finances or seeking authorisation to make decisions. As a separate entity, the business runs efficiently whether you take on partners or sell your shares. Shareholders are not liable for company debts, although there are some tax liabilities.

A public company is a corporation whose ownership is among the general public in many shares of stock traded on a stock exchange. Many investors own the securities of a publicly-traded company. Advantages of a public company include: Public companies raise capital and funding through the sale of their securities; and Profit is gained in the form of a dividend or capital gain to the holders of these securities.

A non-profit company is assimilated for a public benefit or relating to cultural or social activities or collective interests. The name of the non-profit company ends with NPC. A non-profit company is a legal entity separate from its members and must apply all of its assets and income to advance its objects. Members are not required for a non-profit company to be incorporated, but it must have at least three directors. Incorporators are the non-profit company’s first directors. The assets and financial gain of a non-profit company are not for the benefit of the incorporators, members, and directors except as compensation for their services.

A franchise is when the owner(franchisor) licenses their business to a third party(franchisee), giving them the right to use the business’s name to distribute goods, services, and systems, for a fee. The franchisor and the franchisee enter into a licence or franchise agreement.

Advantages of operating a franchise include: A franchisee can capitalise on a franchise with a successful track record and reputation; and Franchises invariably offer training programmes to optimise how the franchisee runs the business and speedily capitalise. Ongoing operational support ensures the growth of your business.