ADVANTAGES

AND
DISADVANTAGES
 SOLE TRADER
/PROPRIETORSHIP
Simplest structure.
Usually involves one person and can be operate under that
person’s name.
Owner owns the business entirely.
There is no legal separation between owner’s personal
assets and those of the business.
Business is taxed through owner’s personal income tax., and
losses can be used to reduce taxes on the other sources of
personal income.
PARTNERSHIP
Created when two or more people agree to carry on a
business for profit.
A legally binding relationship in which each partner
is liable for the actions of the others.
No difference legally between proprietorship and
partnership, except that in a partnership, all share the
profits and liabilities.
Partners taxed on business earnings in proportion to
their share.
Limited Company (Corporation)
Identified by the use of such words as Limited,
Incorporated or Corporation – or abbreviation of these
words– after the company name.
 A separate entity in law, distinct from its shareholders,
officers and directors.
Assets belong to the company, not the owner(s).
Owner(s) of limited company cannot be held personally
responsible for any debts of the company unless such
debts have been guaranteed personally.
Publicity Traded Limited
Company (Corporation)
Company is traded on a stock market or some other form of
public recognized trading body.
The company must have a board of directors that is elected
by the stakeholders.
Must hold an annual stockholders meeting.
Board decides on long term direction and strategies of the
company .
Board must report annually to the national entity overseeing
publicly traded companies.