By Cyrus Maina: July 2019
There are various vehicles by which one may use to operate or transact business in Kenya. These vehicles include: a lone proprietorship business, a relationship, an organization tied to shares or by guarantee, a trust, a culture, or a Non-governmental Organizations (NGO). Below are some of the comparisons of trading through a company compared to other forms of business vehicles. Companies in Kenya are regulated under the provisions of the firms Act (Cap. Laws of Kenya. Under the Act one may add a public or private company.
Regarding the liability of users in an organization, an ongoing company may be tied to stocks or by assurance. Although unlimited companies may be incorporated under the Act, these are not common. Compared to a public company, talk about in an exclusive companies aren’t freely transferable. Besides, unlike a public company, a private company is prohibited under the Act from inviting the public to subscribe for its shares or debentures. An organization limited by guarantee is usually intended for some charitable items and is not just an appropriate vehicle for trading purposes.
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This reason for is that; in an organization limited by guarantee it is generally not permissible for the business enterprise profits of the company to be shared out among the people of the business by way of dividend payment. The following are the advantages and disadvantages of trading through an ongoing company in comparison to trading through a lone proprietorship business.
1 In the forming of an organization, there is usually a considerable amount of start-up costs that must definitely be incurred by the promoters of the business in incorporating the company. These preliminary expenditures include the legal fees paid to lawyers for the preparation of incorporation documents (i.e., the memorandum and articles of association) and fees paid to the federal government such as the enrollment and stamp duty fees. Besides, in the case of a public company limited by shares, additions expenses would be incurred by the promoters in the planning of prospectuses for the purposes of appealing to the public to subscribe for stocks or debentures in the company.
By contrast, a lone trader has little, if any, start up cost since there are no incorporation documents that should be prepared. 2 An ongoing company, whether public or private, has a legal personality of its own. This legal feature makes an ongoing company-specific Atlanta divorce attorneys aspect from its members.
For this reason, an ongoing company gets the legal capacity to trade, borrow, lend, sue, and become sued in its name. Alternatively, a single proprietorship as a form of business entity is an unincorporated entity and has no legal personality of its own. Due to this fact, there is absolutely no separation in rules between the lone trader himself and his business.
By extension, the possessions and liabilities of the business and the ones of the individual single trader will be the same. 3 The “life” of a singular proprietorship business would depend on the entire life and fortunes of the owner. Therefore, generally, the death of the exclusive investor means the final end of his business.
On the other hands, an ongoing company is regarded in regulation as having a perpetual succession. By this is intended that; the lifetime and business of the ongoing company are not suffering from the death of its users. 4 In comparison to a sole proprietor, an ongoing company, by virtue of its legal constitution and attributes, is suitable for improve the necessary capital for its business projects better.