When setting up a business there are several different types of models you can operate under. Here’s a brief overview of your options.
Sole trader: a type of set-up whereby the business has no separate legal existence from its owner. You can use a business name or your own name and as a sole trader you are responsible for the liabilities of your business.
Partnership: unlike a sole trader, a partnership involves two or more people starting a business. All partners legally share profits, risks and losses according to the partnership contract (which is established at the onset of the business).
Company (Pty Ltd): a proprietary limited company is the most common type of company used by small business. Unlike partnerships and sole traders, it has more regulatory requirements and is a legal entity separate from its shareholders/owners.
Trust : A trust is an obligation imposed on a person – a trustee – to hold property or assets (such as business assets) for the benefit of others. These others are known as beneficiaries. If you operate your business as a trust, the trustee is legally responsible for its operations. A trustee of a trust can be a company, providing some asset protection.After you have decided what model suits you best it is then important to implement a business plan. A business plan is essential for any business, no matter its size. Generally a business plan should cover the following:
• your business goals
• marketing initiatives
• industry research
• operations/management plan
• financial plan
Remember, your business plan should be an ongoing initiative which is reviewed regularly.
Our team of experts at Bottrell Business Consultants will be able to help you choose what structure will best suit your business