Determining the kind of business to set up
If you have decided that you are going ahead with setting up your own business, the next step is to determine what kind of business you should set up. This is an important question because it has financial implications for you in the long term, medium and short term, so you need to think it through carefully.
Please note: The list I have provided in this article is by no means exhaustive. The intention is to give you a few pointers to help you on your way. If you need more information, please contact ALL5 Holding, and we will be able to assist you.
In coming to a decision, it may help to consider what you think is important in your life
How large is your appetite for risk and are you prepared to make personal sacrifices?
What are your goals (short term, medium term, and long term
What kind of lifestyle you would like to enjoy?
Do you have financial and time related responsibilities that will hinder your progress?)?
Are prepared to take risks or are you risk averse etc.?
Do you have the resources in place to test drive your brilliant idea before going big?
These are important questions to ask yourself when you are considering whether to set up your own business.
If you have answered the above questions with confidence, then you can move on to the next step.
Choosing the type of business to register.
In South Africa, there are various forms of businesses that can be set up each with their own pros and cons, nuances on tax and personal liability implication.
- a small business or sole proprietorship,
- a private company (Pty) Limited).
- and a public company (Ltd).
It’s a question of choice, influenced to a great extent (in normal circumstances) by your objectives and preferred choice of personal risk.
Whatever choice you make, within the class of business of a small business or sole proprietorship, a private company, or a public company, with some variations in between, another important factor that should influence your choice should be the prevailing economic conditions. This is particularly relevant in the case in South Africa where disposable incomes are shrinking and perhaps for your target customer, employment is no longer a certainty and.