Entrepreneurship Delivered in: Islamia University Bahawalpur Presented By: Tasawar Javed

Forms of business Whenever you think of Business you need to consider Legal issues related to this Business You can Risk you Life but Don’t Risk your Business Government regulations can boost your business as well as it can affect your business Whenever you have business plan; you must consider which form it will take; either you are going for partnership or sole trader or any other form; will be discussed in this lecture later You must know on what level your business is; so which form of business will suit in the country you are; or the set of regulations you will follow

Popular forms of Business Sole Traders Partnerships Limited Companies Franchises

Sole Traders Business owned by one individual Simplest form of business to start All we need is the first customer Few regulations No major requirements about accounts and audits Individual will pay personal taxes Taxes are calculated on the basis of profit made by business

Sole Traders Two important Limitations: 1 st ) Borrowing problems – Cuz lending institutions prefer assets of the business to be placed in legal framework of a company 2 nd ) Liability – sole trader is personally liable for all the debts of the business, no matter how large – So creditors may look both business assets and proprietor’s assets as well to satisfy their debts – But is it emphasized? Not really Bank looks for personal guarantee from the proprietor before giving a loan

Partnerships Group of sole traders They come together; formally or informally to do business Pool their resources, contribute capital, skills Face all the advantages and disadvantages Requires a lot of trust Formal agreements need to be introduced Some professions, such as doctors and accountants, are required by law to conduct business as partnerships,

Partnerships Disadvantage are: – Each partner has unlimited liability for the debts may be they occurred personally – Partnership is held to cease every time one leaves and 2 nd joins – It means the dividing up the assets and liabilities in some way – Partnership agreements covers such issues as capital contributions, division of profit and interest on capital, power to draw money or take remunerations from the business, preparations of accounts and procedures when the partnership is held to cease Advantages are: – Easy to form – Minimum of regulations

Limited Companies Registered in accordance with provisions of the companies Acts is a separate legal entity distinct its owner or shareholders, and its directors or managers It can enter in contract or SUE or to be Sued Taxed separately through corporations Tax Divorce between management and ownership, with a BOD elected by the shareholders to control the day-to-day running of business The liability of the shareholders is limited by the amount of capital they put into the business Company has unlimited life and can be sold on to other shareholders No limit to the number of shareholders They can attract additional risk capital from banks

Limited Companies Advantages: – Limited liability – Easier to borrow money – Can raise risk capital through additional shareholders – Can be sold on – Pay corporation tax Disadvantages – Must comply with companies Acts – Greater regulations – Greater disclosure of information

Franchises A business in which the owner of the name or method of doing business allows a local operator to ser up a business under that name. The local operator may be a sole trader or a limited company Exchange of initial fee Royalty of sales Guide lines to run a business Price and performance standards Type, size, layout of shop or business, training and other support or controls Already existing in market and easy to run; Its well-known business so better chance to successful start up

Franchisee Advantages: – Business format proved, less risk of failure – Easier to obtain finance than own start-up – Established format, startup should be quicker – Training and support available from franchisor – National branding should help sales – Economies of scale may apply Disadvantages: – Not really your own idea and creation – Lack of real independence, rules are from franchisor – It could be expensive – Royalties can be high – Brand could be damaged

Franchisor Advantages: – Way of expanding business quickly – Financing cost shared with franchisees – Franchisees usually highly motivated since their livelihood depends on success Disadvantages: – British Franchise association rules take time and money to comply with – Loss of some control to franchisees – Franchisees can influences the business – Failure of franchisee can reflect on franchisor – May be obligations to franchisee in the franchise agreements

Thank You!!!! Q&A