Business Entites

BT20403/Topic2

OUTLINE

Business Entities:

Sole Proprietorship Partnership

○ Definition ○ Main characteristics ○ Relations of partners to one another ○ Liabilities of partners ○ Partnership property ○ Dissolution of partnership

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BUSINESS ENTITIES

There are various types of business that are widely being carried out in Malaysia. The most common types of business are: Sole Proprietorship (Perniagaan Tunggal) Partnership (Perkongsian) Companies (Syarikat) Sole proprietorships and partnerships – unincorporated associations, unlike associations, companies.

SOLE PROPRIETORSHIP

Sole proprietorship is the earliest form of doing business and is still the most common form of business model. The business is carried out by a person individually. The sole proprietorship is the owner of the business, hence he has total control of the management and finances of the business.

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Characteristic of Sole Proprietorship

The sole proprietorship business has no separate legal personality from the sole proprietor. The sole proprietor has the right to the profits of the business since he is solely responsible for the business. The liability of the sole proprietor is unlimited (no separation between personal and business asset). If the sole proprietorship dies or becomes bankrupt, the business comes to an end.

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Formation of Sole Proprietorship

There is no formalities to be complied with. However, there is a requirement for registration of the business under the Registration of Business Act 1956 (except exempted by RBA). It is an offence to carry on business if the business is not registered: s.12(1) RBA. RBA. The person responsible for a business shall, not later than 30 from the date of the commencement of the business, apply to the Registrar for the registration of the business (s.5(1) RBA). (s.5(1) RBA).

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