Business Entities and Law Summary

What is the aim of combining Law and Business?

Answer: Distinguishes between the different types of businesses – within context of SA’s colonial history. How businesses makes money through contracting with their employees and clients. Considering: profit of businesses in terms of paying taxes. To ponder: some provocative & critical thoughts on the role and place of business in a transformative democracy.

What are the 5 types of business organisations/ structures / entities in South Africa?

Answer: 1. Sole-Proprietorship; 2. Partnership; 3. The Companies; 4. Close Corporation; 5. Business Trusts

The main points of a Sole-Proprietorship?

Answer: Are the single legal owners of their business. They exercise complete control. They provide their own capital and bear all the legal responsibility for their business. They share profits alone and are liable for all losses alone. Are personally liable for debts incurred by the business. Due to there being no limited liability for sole traders, there is no difference drawn between their personal asset and their business assets, therefore personal assets can be used to pay off business debts. Depending on the type of business conducted, no registration may be required.

The main points of a Partnership?

Answer: Consists of a minimum of two partners and a maximum of twenty partners. An association formed with the intention to make a profit; A partnership is a business structure aimed at making and sharing profits; Cannot be formed with the objective of being a charity/ non- profit; Partnership is formed through a partnership agreement which may be in writing, orally discussed or tacitly implied through conduct; All partners must participate in the management of the business and each get a share of the net profit of the business; Partners are jointly owners of the assets of the partnership; Immoveable property must be registered in the names of the partners.

Disadvantages of a Sole Trader?

Answer: DISADVANTAGES: Personal liability for debts of the business Limited expansion of growth due to limited capital Lack of legal continuity Increased tax liability

Disadvantages of a Partnership?

Answer: Does not have perpetual succession; Automatic dissolution of the partnership occurs when one partner decides to exit partnership, death, insolvency or retirement and results in the need for creating a new partnership; Legal continuity is disrupted by the entry or exit of any partner; Partnerships not subject to income tax.

What is the two broad categories/ types of companies?

Answer: 2 broad categories: profit & non-profit companies

Companies are regulated by what legislation?

Answer: Companies Act 71 of 2008