This article is for general informational purposes only and is not meant to be used or construed as legal advice in any manner whatsoever. All articles have been scrutinized by a practicing lawyer to ensure accuracy.
How many types of businesses are there?
There are three types of business out there:
- There's a sole proprietorship...
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Then, there's your regular partnerships...
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And of course you've heard of companies..
So, what's the difference between these three?
Let's find out together in this simple table.
TYPE
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STRUCTURE
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- An individual doing his own business
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- Two or more people doing business for profit.
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- A legal entity separate from it's members
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FORMATION
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- No need to be formed in writing
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- Can be formed orally or in writing
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- Must be formed in writing, through a Memorandum and Articles of Association.
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REGISTRATION
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- Must be registered under the Registration of Business Act 1956
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- Must be registered with the SSM under the Registration of Business Act 1956
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- Must be registered with the SSM under the Companies Act 1956
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MEMBERSHIP
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- There is only one person.
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- A maximum of 20 partners, unless it is a professional firm
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- No maximum number, unless it is a private company (50 members)
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MANAGEMENT
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- The sole proprietor owns and manages the business himself
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- Partners are agents of the partnership and are generally entitled to manage the partnership firm
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- Company members are not its managers (directors) or agents
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BORROWING POWER
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- Unrestricted borrowing powers
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- Unrestricted borrowing powers
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- Limited in borrowing, only for the purpose of its objective as stated in its Memorandum of Association
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LIABILITY
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- Unlimited liability for the business debts
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- Unlimited liability for the business debts
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- Company members are not liable for the company's debts once they hold fully paid company shares.
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DISSOLUTION
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- Can be dissolved informally
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- Can be dissolved informally
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- There must be a formal procedure, winding up and liquidation, in dissolving the company
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I’m curious now...which of these business types you think you want to start?
