Before you start a business it’s very essential for you to decide if you want to start a sole trader-ship, a business partnership or a limited company? It is your call to decide if you want to do it singly, or with two people, or with a group of people. This is the most important decision of your life. The decision you take will not only affect your career, but your entire life. The three available options have equal advantages and disadvantages.
Q. Haven’t you decided what is the enterprise that you want to start?:
If you choose to be a sole trader, it is the safest option available. You can decide to be single-handed and run your business as a one-man show. If you are a sole trader, you can invest on your own. You will have to put up your own investment or look for other sources of finance all by yourself. If you earn profits, it is your profits, but if you incur losses, it would be your loss. Whatever you do, you are on your own. You will have to handle accounts and tax matters by yourself. So, if you would like to be alone and do all things by yourself, you can chose to be a sole trader.
Being a business partner, can either be a good or a bad option as it has its own pros and cons. When you start a business partnership, you share the profits or losses in the ratio of your partnership. The ratio of your partnership would depend entirely on the ratio of investment that both the partners make. If both the partners put up equal investment, the profits or losses would be shared equally between the two. Trust is a very essential and important element in partnership and there should be mutual trust and belief between both the partners. However close friends the partners may be, it is essential to execute a business partnership in accordance with the law. This document should contain all the details of the partnership.
A company is definitely much larger than partnership and is more complex than a partnership. You need to register your company followed by other legal and corporate formalities such as Memorandum of Association, Articles of Association, Certificate of Incorporation, payment of stamp duty, declaration of compliance. Other formalities include registration for personal identity number, registration for National Hospital Insurance Fund, registration for National Security Fund, and registration for a business permit.
Being a sole trader may probably sound as the safest choice to any person. But in case you are short of finance and have a trustworthy business partner, you can always go in for a business partnership. If that is not possible and if you have a small group of friends who would like to reach great heights by working together could also be a great option. All three types of businesses have their own pros and cons. Always remember that you have to be comfortable with what you chose to do and your decision should satisfy you. The mantra to success in business is enjoying your work and therefore, your comfort level and enjoyment of work can help you decide what you want to be.
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