The Registration Process Of A Sole Proprietor Law Company Business Partnership Essay

Published Date: 02 Nov 2017

As we know that sole trader is a business that automatically gets started when a sole trader or single person decides to enter into business of their own choice. For sole proprietor it’s not compulsory to be register with a government agency as a condition of operating the business. Sole proprietors and the business which they are running have no separate identity from one another as they both are considered to be the same which exposes the sole proprietor’s personal assets to business obligations and debts. A sole proprietorship is also known as a sole trader or sole owner, or simply we can say that sole trader business is a kind of business unit which is owned and managed by one person and where there is no lawful division between the proprietor and the business as we said before. All profits and all losses are held upon the sole owner or the proprietor. All of the assets and properties of the business are completely owned by the proprietor and all amounts outstanding of the business are the debts of the owner and he himself must pay them from their personal resources. So, the owner has unlimited liability in such kind of business. It is a "sole" trader business in the sense that the owner of the business has no partners like in partnership.

This is the most straightforward structure and the easiest form of business. Mainly it suggests that the business or sole trader’s decisions are being made by single individual which is only the proprietor. Of course, it doesn’t essentially mean that the sole trader business has only one employee because we are talking about the principal the owner of that firm. The sole trader can hire others to do any or the entire of the work in the business by his/her own choice. So, establishing this type of entity is easy as compare to others, getting capital for such motive can be hard to some extent, and the owner himself is personally liable for the business as we already discussed. On the other hand if see through the perspective of customers than in case of a lawful claim by a consumer, or if there is a monetary problem with the business occurred, the creditors can sue the proprietor/owner.

Steps to Register a Sole Proprietorship

This is quite simple registration process in sole proprietor than other firms, however instead of doing it by yourself, gets a tax consultant or may be a lawyer to do it for you at a small cost, it is not costly. The subsequent steps need to be taken are as follows:

Firstly you have to decide on and select a Business Name, Ensure that the sole proprietorship's selected business name is available by conducting a search with the secretary or either by the department of state website where the sole business operates. This will ensures you that either the another company registered with the sole proprietors home state does not have a business name that is too similar with yours business name;

Then you have to Print the Letter Heads for your business, envelopes and visiting cards too;

After the confirmation of the business name, you will write down an Account Opening application to your Bank, which states that this is your own business and you are the only owner of it as compare to any other person;

Then Open an account at a close by bank's branch near to you for your further procedures;

After opening an account the, next request from you is to the close by bank to give a letter mentioning that this is your account and business;

When you get the letter than you submit the close by bank certificate and your request with the Tax Authority i.e. the "Federal Board of Revenue (FBR)" which was previously named as the " Central Board of Revenue";

Now assume if you are on a job, you previously have a "NTN (National Tax Number)", so the same NTN will be utilized for your Sole trader status as well.

So as soon as the status is added or entered, you become a legal registered body.

Registration Process of a Partnership

Now if we talk about the registration process of partnership than this firm is not obligatory by rule and there is no penalty for non registration. But however there are some disadvantages for not registering are also there. For example, if any dispute occurs among the partners or with the previous partners, than in this case no suit in any court of law can be filed by such partners or ex-partners against the firm which is not registered or against themselves to enforce any right arising from any contract/agreement or conferred by the Partnership Act, 1932. So, an unregistered firm has this disadvantage that it cannot institute a suit against a third party to enforce any right arising from a contract which the made, e.g. for the recovery of the price or cost of goods supplied. It must be remembered that a third party may file suit against an unregistered partnership. And still in this scenario, the partnership can not state any amount that may be outstanding to them in the court. There is no protection to the partners’ liability in an un-registered partnership. As there is no formal documentation or evidence stated that they are in partnership, suppose if individual decides to refuse the existence of the partnership than there is not a lot that can be done about it lawfully. So, prior registration is therefore considered to be necessary.

Nevertheless registration can give many advantages to the firm. So, first of all Form -I needs to be filled by you which act as a partners and then it is attached in appendix B. After above the Partnership agreement is made on the Stamp Paper which is worth Pakistani Rs.500. A model for the statement of Partnership agreement is also must be there in appendix B. After this registration you will have to pay fee of Rs. 500 which also needs to be deposited in National Bank of Pakistan through Chelan Form. It is mandatory for the partnership firm to be located in commercial area. With all above there is also needs of printed copy of Lease Agreement or Ownership evidence needs to be there as well. A template of Lease Agreement is also attached in appendix B. The next requirement after above is the attachment of computerized National Identity Cards of all Partners and Witnesses, and then it is mandatory that all papers should be properly attested from Notary Public While the partners in the partnership business must visit the relevant office after three calendar days of submission of papers. And in the very last an affidavit concerning correctness of papers and existence of office needs to be presented on stamp paper of worth Pakistan Rs. 5.

Registration process of a Corporation

For the registration process of a corporation the name must be authoritatively accepted by the Registrar of joint stock Companies. When you apply to the Registrar of the companies for the authorization of a name, it is suggested by the registrar of the companies that two or three potential names ending with the word "limited" should be submitted as this should avoid the unnecessary delays in name. So, applicants should keep in mind that a name is not expected to be accepted by the registrar if it is comes under following conditions:

If your suggested name is analogous to the name of an established company

The name which you suggests is considered misleading or confusing

If this name implies links with royalty

Or if this name includes the word "Imperial", "National", and "Corporation, or Co-operative.

But in case of a subsidiary company proposes to take on the name of its parent company, the very foremost it must furnish its written permission for the utilization of its name of the parent company under which it is going to work. Then after this if once the authorization of the "Central Bank" has been obtained by that person, then the subsequent step is the listing or registration of the company. 

So for a company to be registered, the below given documents and required information which is relevant must be submitted with the Registrar of joint stock Company as early as possible:

The Memorandum and Articles of Association.  The Memorandum must state the following things;

The name of the company must having a word with "Limited" as the last word

The registered office of the company, that where is the location of that office.

The objects of the company which you are going to start , which it is advisable by the registrar of joint stock companies that they should be as broad as possible so as to allow the company or business to employ in any kind of relevant business or activity without any difficulty.

Then here you have to write a statement that the liability of the company’s members or share holders is limited by shares or guarantee.

After that the total of the share capital and particulars of the shares authorized to be issued persons, and all the subscribers to the memorandum jointly with the amount of shares for which they have subscribed must be mentioned in the memorandum.

The next step for the process is the Articles of Association which basically administer the company's internal events and functions. The articles enclose all the regulations prevailing in the internal management of the company or business and its members and regulating the rights of its members or share holders. Companies articles of association contains matters such as:

Annual General meetings of the company which held

Members voting rights

Transfer of shares in the company

Appointment and powers of directors regarding the company which you selects

Dividends of the company

Companies Accounts & Audit

MOA & AOA, which have been made after cautious study by attorney and Focus Business Services which performs in your company, must be made accessible but special care should be taken that the initial few main objects are modified to the specific conditions and the most important business objects of the corporation which you are operating.

Your company list of the appointed directors and the secretary's name and related details must be present there. A minimum of one director is obligatory, but there is no maximum quantity stated in it.  And there is no obligation to have local directors of a company or business; this will be desirable especially where the requirements of a double taxation agreement are going to be used. Company directors can also be worked as Secretaries, but in case of a sole Director, he cannot act as a Company Secretary at all, except only in the condition of a "1 shareholder , 1 director , 1 secretary company" when one individual can certainly act in all three stated capacities. 

After above the address of the business or company's registered headquarters, which will be the office or place where all related official notices or documents will be served of the business or company.

Then at the last the final step is the statement or affidavit from an attorney confirming that all official procedure provided by The Companies’ Law and rules and regulations have been properly applied and complied with in relation to the incorporation.

Once all the required documents have been stiff with the Registrar of joint stock Companies and he has pleased himself that they are in organized form then he will issue a Certificate of Incorporation to the company’s partners. The company formation and registration procedures, includes the printing of all official stationery, documents and opening the necessary bank accounts which are required, can usually be completed within a period of two weeks not more than these days, after this all the company can start operating immediately.

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