1. DIP – Business Ownership
Lim Sei cK

2. Main Business Ownership
Sole Proprietorship
Partnership
Company / Corporation
Cooperatives
Franchise

3. Sole Proprietorship
A sole proprietorship is a business entity owned by one person who is legally responsible for the debts and taxes of the business.

4. Sole Proprietorship 1 owner Is unable to carry on, Dies, or
Ownership:
1 owner
Life: Ends when owner:
Is unable to carry on,
Dies, or
Closes the firm
Responsibility for business debts if firm is unable to pay:
Owner

5. Sole Proprietorship - PRO
Total control of the business by the owner
Cheap and easy to start up
Keep all the profit
Business affairs are private

6. Sole Proprietorship - CON
Unlimited liability
Can be difficult to raise finance
Can be difficult to enjoy economies of scale, i.e. lower costs per unit due to higher levels of production
There is a problem of continuity if the sole trader retires or dies

7. Partnership 2 or more withdraws, Dies, or Closes the firm
Ownership:
2 or more
Life: Ends when partner(s):
withdraws,
Dies, or
Closes the firm
Responsibility for business debts if firm is unable to pay:
Partners individually and jointly

8. Partners must agree upon:
Amount each partner will contribute
Percentage of ownership of each partner
Share of profits of each partner
Duties each partner will perform
Debts- the responsibility each partner has for the partnership’s debts

9. Partnership - PRO Spreads the risk across more people
Partner may bring money and resources to the business (e.g. better premises to work from)
Partner may bring other skills and ideas to the business
Increased credibility with potential customers and suppliers

10. Partnership - CON Have to share the profits.
Less control of the business for the individual.
Disputes over workload.
Problems if partners disagree over of direction of business.

11. Company / Corporation A company / corporation is
a publicly or privately owned business entity that is separate from its owners;
has a legal right to own property;
do business in its own name; stockholders are not responsible for the debts or taxes of the business

12. Limited Companies
A limited company is a business that is owned by its shareholders, run by directors and most importantly whose liability is limited.
Limited liability means that the investors can only lose the money they have invested and no more.
This encourages people to finance the company, and/or set up such a business, knowing that they can only lose what they put in, if the company fails.

13. Company / Corporation Ownership: Can be thousands
Life: Continues indefinitely; ends when:
-business goes bankrupt
-stockholders vote to liquidate
Responsibility for business debts if firm is unable to pay:
Stockholders can lose only the amount invested

14. Company / Corporation - PRO
For people or businesses who have a claim against the company, “limited liability” means that they can only recover money from the existing assets of the business.
It is easier to raise money through other sources of finance e.g. from banks

15. Company / Corporation - CON
Costly and complicated to set up
Certain financial information must be made available for everyone, competitors and customers included
Shareholders in public companies expect a steady stream of income from dividends
Directors’ legal duties (set out by Companies Act)

16. Cooperatives
A co-operative business is that they are owned and run by the members - the people who benefit from the co-operative's services.
The governance structure of cooperatives is significantly more open, democratic, transparent and inclusive than that of for-profit businesses.
Profit may not be the primary objective.

17. Cooperatives - PRO Achieve a common purpose.
More power to buy or bargain
Lower debt risk
Share the load

18. Cooperatives - CON A long, drawn out decision-making process
Co-operatives may find it difficult to raise finance
Idealistic and ethical aims may not be agreeable with all members
Difficulty attracting members

19. Franchise
A franchise is where a business sells a sole proprietor the right to set up a business using their name.
The franchisor is the business whose sells the right to another business to operate a franchise
A franchise is bought by the franchisee – once they have purchased the franchise they have to pay a proportion of their profits to the franchiser on a regular basis.

20. Franchise - PRO The franchisee is given support by the franchiser
Less investment is required at the start-up stage since the franchise business idea has already been developed
The chance of failure among new franchises is lower as their product is a proven success and has a secure place in the market

21. Franchise - CON Cost to buy franchise – can be very expensive
Have to pay a percentage of your revenue to the business you have bought the franchiser from
Have to follow the franchise model, so less flexible

22. Start a business in Brunei
All businesses in Brunei Darussalam must be registered with the Registrar of Companies and Business Names at the Attorney General’s Office.
The proposed names of business or company must be submitted to the Registry of Companies and Business Names for approval and a fee of B$5.00 is imposed for each proposed name.
[Source: in-brunei-darussalam/setting-up-businesses]

23. Reasons to start a business in BRUNEI
BUSINESS AND INVESTMENT INCENTIVES
His Majesty’s government has announced the reduction of the corporate income tax rate from 30% to 22% for the financial period 1 January onwards
Corporate tax relief of up to 5 years for companies that invest B$500,000 to B$2.5 million in approved ventures

24. Reasons to start a business in BRUNEI
8-years tax relief for investing more than B$2.5 million
An 11-year tax break if the venture is located in a high-tech industrial park
Exemption from import duties on machinery, equipment, component parts, accessories, building structures and raw materials

25. Activity 1. Which of the business organizations is the best?
2. How can a sole trader raise capital for the business?
3. How can a limited company raise capital for a business?
DISCUSS!

26. To be discussed next week
Read on : Onebiz, online biz licensing system.