TITLE
Types
of NAME
Business
Qaiser Iqbal
Associate Member of Institute of Cost and Management Accountants of Pakistan
QAISER IQBAL
Businesses can be Categorized on the basis of Ownership criteria
Sole Proprietorship
2. Partnership
3. Company
1.
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Sole Proprietorships
 A business owned by one person
 the process of starting and managing your own business
 About 3/4 of all businesses in the Pakistan
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Sole Proprietorships
Advantages



Easy to start up
Able to make all
decisions for the
business
Keep all profits
Disadvantages
 Unlimited
liability
 financial liability is NOT limited to
investments in the business –
extends to his/her total ability to
make payments
 Limited access to credit or financing
 Owner may not have all the skills or
expertise necessary
 Business dissolves when the owner dies
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Partnerships
 Owned by two or more people who share its risks and rewards
 A partnership agreement outlines the rights and responsibilities of each partner
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Partnerships
Advantages
 Easy
to start up
 Easier to obtain money
 Each partner contributes
 Bank more likely to lend
 Each partner brings different
skills and talents to the
business
Disadvantages
 All
partners share risk
 May be held responsible for
partner’s mistakes
 Unlimited liability
 Personality conflicts can affect
decision making
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Companies
 Registered by SECP and operates apart from its owners
 The owner must get a Registration Certificate of Company from the SECP
 The company must have a board of directors
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Companies
Advantages
 Limited
liability
 Owners are only responsible
for the capital they invested
 Easy to raise money by selling
stock
 Business continues after owner’s
death
 Professionally managed (hire
experts)
Disadvantages
 Double
taxation
 Company pays tax on income
 Stockholders pay tax on Dividends
 More government regulations
 Difficult and costly to start
 Complex business to run
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