Sole proprietorship Flashcards
1
Q
What is a sole proprietorship?
A
A business structure where an individual operates and owns a business in their personal capacity without the need for formal registration or a separate legal entity.
2
Q
What are the key characteristics of a sole proprietorship?
A
- Single ownership
- Unlimited liability
- Decision-making authority
- Income is taxed as part of the individual’s personal income tax
- Simple structure
- No/few legal formalities
3
Q
What are the advantages of a sole proprietorship?
A
- Ease of formation
- Direct control
- Flexibility and autonomy
- Cost efficiency
- Direct access to profits
- Privacy
4
Q
What are the disadvantages of a sole proprietorship?
A
- Unlimited liability
- Limited access
- Limited expertise and resources
- Lack of continuity
- Limited growth potential
- Taxation (higher tax brackets as business grows)
5
Q
What are the legal requirements and obligations to establish sole proprietorship in South Africa?
A
- Business name
- Tax registration
- Licences and permits
- Compliance with laws and regulations
- Accurate financial records
- VAT registration if applicable
6
Q
Which court rule defines what a firm is?
A
Rule 14(1).
7
Q
What is a firm ito rule 14(1)?
A
A business including a business carried on by the sole proprietor thereof under a name other than his own name.
8
Q
Which rule encapsulates the legal personality of a firm?
A
Rule 14(2).
