Forms of Ownership

Front

What is the formation procedure in South African law regarding businesses?

Back

Some businesses must be registered while others do not require a formal formation procedure. More procedures make it costlier to establish a business.

Front

What does legal persona mean in the context of business registration?

Back

If a business is registered, it becomes a separate legal person from the owner, allowing it to enter contracts and be sued.

Front

What is meant by continuity of existence for a registered business?

Back

A registered business exists independently of the owner, meaning it continues to function even if the owner dies or ownership changes.

Front

How does liability relate to legal persona in business?

Back

If a business is a separate legal entity, it is responsible for its own debts, limiting the owner's liability. If not registered, the owner has unlimited liability.

Front

What are the tax implications for a registered business in South Africa?

Back

A registered business pays income tax (28% for 2019/2020). If not registered, the owner is liable for tax in their personal capacity.

Front

How does business registration affect management and control?

Back

If not registered, the law does not specify who manages the business. If registered, the law imposes certain management requirements.

Front

What determines the capital requirements for a business?

Back

Capital requirements are based on the size and nature of the business; smaller service businesses typically need less capital than larger manufacturing businesses.