3 Types Of Businesses Explained
Should you register as a Sole Proprietor, Partnership, or a Private Limited Company in Pakistan? We know this is a difficult – and very important – decision when starting your business.
Well, we will provide you with an insight into some of these types of businesses, and maybe you can figure out which one is the best for you.
As the name suggests, sole proprietorships are types of enterprises in which businessmen are the lone investors, meaning they are the sole authority and have the freedom to keep all the profits for themselves. Sole proprietors are not accountable or answerable to any personnel. If you are someone who has sufficient personal resources and finance – and if you’re someone who likes being the dominant force in a group of people – then being a sole proprietor might be your cup of tea.
But obviously, the possibility of things not being good in the hood can arise. There are certain repercussions that need to be thought through and taken care of; one of the most serious being the case of unlimited liability: i.e. in the case of the business incurring a serious loss, all the assets of the owner are at stake. Apart from this, lack of innovation and ideas is another setback a sole proprietor can experience since there is only one center of thinking.
Partnerships are enterprises in which two or more individuals run a business together with shared capital investment. Partnerships are mostly formed to avoid the problems that sometimes sole proprietors face. Most of the aspects of a business are shared in a partnership, such as decision-making, additional capital as well as business losses.
If you are someone who is not affected by the ideas of other people and does not shy away from taking advice, then being partners with someone in a business might be satisfactory for you. But then, that depends on how long you are comfortable with sharing profits in a business!
Private Limited Companies
Private limited companies are one of the easier corporations to build and develop in the business world. Since these organizations are ‘private’ in nature, the shares in these companies are sold to kin or friends and not to the general public. These businesses may be small or medium-sized. Private limited companies enjoy a separate legal identity, giving them a higher rank than unincorporated businesses.
But obviously, where there are pros, there are cons as well. As mentioned earlier, the general public cannot be involved when it comes to selling shares, which means the task of providing capital stays with the current shareholders. And that’s where the problem lies for the current shareholders: it’s a tough job in trying to sell shares. In a way, there are risks involved with establishing a private limited company.
You might be overwhelmed with all types of businesses to choose from – but as long as you have the right tools with you, you have nothing to worry about. The one thing that will ensure you smooth business functions is a modern cloud-based POS system like Oscar POS. Such a system will help in automating your business operations with features like automatic POs and seamless inventory management, all while keeping you in check with what’s happening through regular mobile updates.
In the end, it all comes down to your financial position, work ethic, skills, and ambition. Now that you have a basic knowledge of some forms of businesses out there and some advantages and disadvantages pertaining to them, you can make the right decision regarding which type suits you the best.