Chapter 6 Legal form &licences
6.1 Introduction: This chapter discuss the basic forms of business organizations and what type of company will be chosen for the proposed project and all the legal requirements needed.
The Sole Proprietorship: 6.2 Types of Companies: There are 2 basic forms of business organizations, they are: The Sole Proprietorship: The sole proprietor is an unincorporated (individual) business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners. Many sole proprietors do business under their own names because creating a separate business or trade name isn't necessary. Sole proprietorship is also known as "proprietorship".
Partnership Company: A legal form of business operation between two or more individuals who share management and profits. The federal government recognizes several types of partnerships. The two most common are general and limited partnerships.
General Partnership: Owners of a partnership who have unlimited liability. A general partner is also commonly a managing partner, which means that this person is active in the day-to-day operations of the business. Because any partner in a general partnership can act on behalf of the entire business without the knowledge or permission of the other partners, being a general partner offers poor asset protection.
“Another definition of partnership” A business partnership featuring two or more partners in which each partner is liable for any debts taken on by the business. Because the partners do not enjoy limited liability, all the partners' assets can be involved in an insolvency case against the company.
Limited Partnership(LP): Two or more partners united to conduct a business jointly, and each one of the partners is liable only to the extent of the amount of money that partner has invested. Limited partners do not receive dividends, but enjoy direct access to the flow of income and expenses. Generally encourages investors for short term projects . This form of ownership is not often used for operating retail or service businesses.
Joint venture(JV): The cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise. Forming a joint venture is a good way for companies to partner without having to merge. JVs are typically taxed as a partnership.
“Legal form chosen for proposed project”: An Example: The proposed project will take the legal form of (general partnership) company in the eyes of the law and the public because of the great advantages which the partnerships can offer and because forming a limited partnership is more complex and formal than general partnership.
License requirements Students should visit the governmental responsible to know the licenses'requirments for their projects