Understanding the difference between registering a company and a non-company entity
When it comes to understanding company and non-company entities, it's important to consider the legal and operational distinctions between the two.
A company is a legal entity that is separate from its owners and has its own legal rights and obligations. It can enter into contracts and can sue or be sued. Companies are typically operated for profit and can be publicly traded or privately held.
On the other hand, non-company entities such as sole proprietorships or partnerships are not separate legal entities from their owners. The owner(s) are personally liable for the business's debts and obligations, and the business cannot sue or be sued in its own name.
Advantages of a Company:
One of the main advantages of a company is limited liability protection, which means that shareholders are only liable for the amount of money invested in the company. Personal assets are protected in the event of a lawsuit or bankruptcy.
Another advantage of a company is its perpetual existence, which means that it can continue to exist even if its owners or shareholders change.
Disadvantages of a Company:
However, setting up and maintaining a company can be more complex and expensive than operating a non-company entity. Companies also have more regulatory requirements and are subject to higher taxes. See a list of all the yearly compulsory legal requirements for a business.
From an accountant's view, there are also a lot of tax benefits in trading in a company, depending on the size of your business and turnover. A company also gives your business access to more suppliers and tenders that are not open to sole proprietors.
In summary, carefully considering the pros and cons of each structure is important when deciding which structure is best for your business. Regardless of your choice, we're here to help you make the best decision for your business.
This is part of the Blog post series for small businesses. Check out the rest.
If you need help registering a company, please contact us and view our brochure.
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