Economic Project

Contents

Introduction

Business Registration

~Meaning

~Registration Procedure for Sole Proprietorship and Partnership

~Registration Procedure for Limited Company

~Registration Procedure for Overseas Company

~Registration Fee and Levy

~Payment Methods

~Cancellation

Sole Proprietorship

~Definition

~Popularity

~Set-up process

~Advantages

~Disadvantages

~Reason of suitable for Small Business

~Examples

Partnership

~Definition

~Features

~Forms/Establish

~Liability

~General partnership

~Limited partnership

~Advantages

~Disadvantages

~Tax rate

~Dissolution and Termination

Limited Company

~Meaning

~Advantages

~Disadvantages

~Private limited companies

~Public limited companies

~Shares

~Procedures of Formation

~Taxes

Comparison

Conclusion

Working Table

Forms/Establish

  Partnerships, as proprietorships, are not difficult to form. As one of the owners, you share in the profits and the right and freedom to manage. There are few legal restrictions, and the organization is easy to dissolve. You, rather than the business, may be taxed, as in a proprietorship. There are, however, some disadvantages. Each partner is liable for the debts of the organization. If your trusted partner departs without warning for warmer climates, taking all the capital of the business, the debts become your responsibility. While this may not be fair, it is legal. There may be exceptions if fraud is involved.

  Further, since the partnership is nothing more than an agreement to be in business together, it can be difficult to raise capital. Why would anyone want to investment in an organization where the investor does not have ownership rights as well as the certainty of repayment? While two or more people can usually raise more money than one person can, there are limits; and as the business grows, the lack of capital can become a major problem.

  Also, as the business grows, it becomes more and more difficult for the original partners to manage. Since there is limited opportunity, employees cannot be counted on to assume management obligations and tasks, as the rights of control and ownership reside with the partnerships. As with a sole proprietorship, death, imprisonment, or inanity automatically terminate the firm unless the partnership agreement states otherwise and a contractual clause is negotiated.

  If the partnership is to continue after the death of the one of the partners, the partnership can choose between two methods of ensuring the continuity of the partnership. These are:

1. The partners can arrange for the heirs to place the decreased partner.

2. Transfer of a partner’s interest in the partnership.1

~Business: You must carry on activity on a systematic basis with a view to making a profit.

~Profit-sharing: Partners must share in the profits.

~Partnership Name: The name of the partnership should be registered with the Business Registration Office under the Business Registration Ordinance.

~Partnership Agreement: There must be a partnership agreement that is valid under contract law in writing, orally, or under seal. A partnership can be implied by the conduct of the parties involved. All partners carry on the business.                                                         

~Tax: A tax return must be filed by a partner and the partnership must pay profits tax.                                                  

~Observe the law: Follow the Employment Ordinance, the Employees' Compensation Ordinance, and the Inland Revenue Ordinance.

~Disclosure: The name of your business and the names of each partner must be disclosed on the firm's letterhead and other business documents.2

1 Small Business Management: a planning approach - Joel Corman and Robert N.Lussier

 Times Mirror Higher Education Group, Inc. Company (1996) P.30

2 http://www.legalstudio.com/Site/sg/business/business_qanda/startup.asp#partner

P.19