While you’re starting a new business in Pakistan, you primarily have to choose between the basic types of business entities like Sole Proprietorship or Private Limited Company or Partnership or Limited Liability Partnership (LLP). Each of them are best for particular situations or purposes and also differ in traits in view of the liabilities, taxes and the capacity to regulate the profit and loss of the business. Thus, whether your business is home-based, factory oriented or office set-up, think well, identify your resources, build your plans and then decide what option to choose from these categories. Yet, in this post we will discuss the differences between sole proprietorship and private limited company in Pakistan and their advantages over each other:
A private limited company is a corporation which does not sell company shares to the public and keep them private. The company is either managed by the shareholders or they appoint directors for the purpose. These are usually small to medium sized businesses. The financial statements of a private limited company are not public, their shares do not trade on Pakistan Stock Exchange and their accounts are not required to be audited.
A Private Limited Company has many benefits over sole proprietorship; some of which are:
This is defined as a business which has only one proprietor/owner and no lawful difference exists between the owner and the business. The control lies within the hand of a single individual where his liability is unrestricted as the owner and business do not have any legal dissimilarities.
Sole Proprietorship has many benefits over private limited companies; some of which are:
To summarize, both private limited company and sole proprietorship have advantages over each other. One has to choose between these two types of business entities, on the basis of the nature of their business given that both of them are good for particular situations or purposes.