Types of Businesses

2422 Words Oct 4th, 2012 10 Pages
Sole proprietorship
Sole proprietorship concern (also known as a sole trader/owner) is the most common and most favored option for individuals who want to establish a small business in Pakistan, or want to start a home-based business. This form of business is used by majority of start-ups on Pakistan, and it is the simplest way of giving corporate face to a small business
Formation
Following are the main steps to start a sole proprietorship business:
· Finalize a business name.
· Print basic business stationary i.e. letterheads, visiting cards etc.
· Prepare firm's name stamp (a common rubber stamp will do).
· Open a bank account in the name of sole proprietor business. The bank manager will require a request letter on business
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Partnership
A partnership or firm is established through written agreement between all the partners. The law governing the partnerships in Pakistan is contained in the Partnership Act 1932.
Characteristics
In Pakistan partnerships are of two kinds:
· Registered Partnership
· Unregistered Partnership
There is no requirement to register a firm, however there are certain benefits of registering a firm. In case of registered firm, the partnership deed is registered with the Registrar of Firms. Unregistered partnership can be dissolved without any formality, however a registered firm can only be dissolved through a written dissolution application to the Registrar of Firms.
By definition partnership is a relation between two or more persons who have agreed through a written partnership deed to conduct the business and share the profits and losses of the business according to the terms of the partnership deed. Partnership business can be conducted by all partners or any of the partners on behalf of others. A maximum of 20 partners are allowed to form a partnership. In a partnership firm the partners’ liability is not limited and they are fully liable for all claims or law su its against the partnership.
Formation
Registration of Partnership
Procedure and Requirements
The registration of Partnership firm is not required by law and there is nopenalty for non-registration. Nevertheless registration can give myadvantages to the firm.