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Summary of 4 pages for the course Business Entities at wits
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Business Entities Notes 2020Lecture: Forms and nature of Business Entities
Advantages Disadvantages
Sole Proprietorship – Is run - All profits belong to - Once owner dies so
by a single owner owner. does the business
- All decisions made by - Owner personally
one person. liable.
- Company dissolved by - Limited skills.
one person - Growth limited by
capital input.
Partnerships – is a legal - No limit on amount - No separate legal
agreement between partners partners. entity.
who come together to make - Each Partner must - Joint and severally
a profit make contribution. liable on dissolution.
- Partners joint and - No continuity or
separately liable. perpetual succession.
- Profits share pro-rata. - Partners are taxed for
- Potential for growth personal share of
in the business income
Company - Separate legal entity. - Legal Formalities
- Limited liability. (onerous and
- Tax = 30% flat rate. complicated for
- Room for growth and formation).
expansion. - Heavily regulated.
- Perpetual succession - Potential for fraud
- Separation of control and tax evasion.
and ownership. - Compliance reporting
- Flexibility. is costly.
Business Trust – Where the founder or donor places assets under the control of another person
known as a trustee. (The trustee Property Control Act governs this).
ADVANTAGES
The trustee controls the assets for the - Don’t have separate legal personalities
beneficiaries. but the trustees are separate.
The trustee protects the assets from - Can’t hold them personally liable
the creditors. unlike sole traders or partners
Parties to a trust include;
i. Founder,
ii. Trustees,
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