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

Advantages

~Greater capital is available, so that expansion can take place.

~The responsibility of control no longer rests with one person. This makes possible holidays and free weekends, and reduces the worry the sole trader experiences in times of ill health.

~Wider experience is brought to the firm and some degree of specialization is possible; this is particularly true of professional partnerships.

~The affairs of the business are still private.1

~Easy to establish. Like the proprietorship is easy and inexpensive to establish. The owners must obtain the necessary business registration certificate.

~Complementary skills. In successful partnerships, the parties’ skills and abilities complement one another, strengthening the company’s managerial foundation.

~Division of profits. There are no restrictions on how partners distribute the company’s profits as long as they are consistent with the partnership agreement and do not violate the right of any partner. The partnership agreement should articulate the nature of each partner’s contribution and proportional share of profits. If the partners fail to create an agreement, the partners share equally in the partnership’s profits, even if their original capital contributions are unequal.

~Larger pool of capital. The partnership form of ownership can significantly broaden the pool of capital available to a business. Each partner’s asset base will support a larger borrowing capacity than either partner would have had alone. Undercapitalization is a common cause of business failures.

~Ability to attract limited partners. Not every partner takes an active role in the operation of a business. Partners who take an active role in managing a company and who share in its rewards, liabilities, and responsibilities are general partners. Every partnership must have at least one general partner (although there is no limit on the number of general partners a business can have). General partners have unlimited personal liability for the company’s debts and obligations and are expected to take an active role in managing the business.2

~A partnership is usually an effective form of business organization in situations where team production involves skills that are difficult to monitor.

~The profit of the partnership is the income of the partners, the profits can be assessed under profits tax or the partners can elect and be assessed under personal assessment.3

~Low set-up cost. The set-up cost of Partnership is very low. The businessman is only required to register with the Commissioner of Inland Revenue. The businessman will be issued with a Business Registration Certificate (BR).4

1 Business Studies (Second Edition) – Geoffrey Whitehead

  Butterworth-Heinemann Ltd (1994) P.87

2 Effective Small Business Management : an entrepreneurial approach (Seventh Edition) - Norman M. Scarborough,   Thomas W. Zimmerer

Upper Saddle River, N.J. : Prentice Hall (2003) P.74-75

3 Economics (Sixth Edition) - Roger A. Arnold

   Australia : Thomson/South-Western (2004) P.482

4 http://www.sgasc.com/Types%20of%20company%20in%20HK%20%28English%29.htm#Partnership

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