Types of Business Entities

business enterprises.

Types of business entities


Before you start your business, you need to decide what type of business enterprise you wish to form. In South Africa, business entities are regulated (amongst others) by the Companies Act, 2008. In terms of the Companies Act, there are 4 different types or forms of business entities which can be formed.

The 4 types of business entities which can be formed are:

1.  A Sole Proprietorship;

2. A Partnership;

3. A Trust; and

4. A Company.

For the purposes of this Article, we have only discussed a private company (Pty) Limited, being the most common form of business entity. The forms of companies are a public company and a non-profit company.

1 person
2-20 partners
At least 1 Donor, 1 Trustee & 1 Beneficiary
No Registration Requirements
Formed by agreement between the partners. No registration requirements
Formed by a Trust Deed. The Trust must be registered at the Masters Office
Formed by registration at CIPC
Not a Juristic Person
Not a Juristic Person
Not a Juristic Person
Is a Juristic Person
No Directors
Partnership can appoint managing partners
Trustees Manage the Trust
At least 1 Directors
Owner is personally liable for the debts of the business
General Rule: Partners are equally liable for the profits & losses of the business
General Rule: The Trust is liable for the debts of the Trust
General Rule: The Company and not the shareholders are liable for the debts of the business
No perpetual succession: If the owner dies, the business terminates
General Rule: No perpetual succession: If a partner dies, the partnership terminates
General Rule: Perpetual succession: Depending on the Trust Deed, if a donor dies, the Trust continues
General Rule: Perpetual Succession: If a shareholder dies, the company continues to exist