THE DIFFERENCE BETWEEN PROPRIETORSHIP AND PRIVATE LIMITED

CORPORATE SERVICES

One of the key points to choose when beginning a company in Pakistan is the organization that the company will take. There are 2 common types of business structures – Sole proprietorship and Private limited company.

Pvt. Ltd

In Private Limited company, at least 2 or more persons are required to form a firm.

A private Ltd company has a separate legal entity apart from its owner’s (shareholder).

It has a perpetual succession, meaning thereby, death of one or more shareholders does not cause winding up of the company.

Limited Liability in sharing Profit/Losses per owner since there are multi[ple owners.

The registration process is a bit complicated.

Proprietorship or One person company

A proprietary concern is run by a single person.

The proprietor of the proprietary unit does not have any separate entity from his business and vice versa.

The death of the owner causes the unit to close. Even if his legal heirs continue the business, it becomes a fresh proprietorship.

Owner itself is liable to all the profit/losses.

Owner itself is liable to all the profit/losses.

SOLE PROPERTIES

No separate legal identity
 Owned by one person
Unlimited liability
 The owner is personally liable for the debt and loses of the business.
Minimal filing requirement
 Tax is assessed in the owner’s tax returns.

PRIVATE LIMITED COMPANY PLC

Separate legal entity
 Distinct from shareholders and directors.
limited liability
 Shareholder liability is limited to his investment in the company..

SOLE PROPRIETORSHIP

Not eligible for corporate Income Tax rebate(CIT) rebate and SME cash grant. Sole Proprietorship may enjoy a personal income tax rebate from time to time.

Which form to choose?

Businesses with high profits may benefit from a private limited company structure
in the form of tax savings and scalability even after taking into account the additional
compliance requirements.
Choose the structure most suitable for your business needs and aspirations.

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Read more about business registration and the services we provide from our website: spectrum tech
Looking to begin a company?
Our Spectrum consultancy services are meant to give great value and take care of your company’s business necessities.
If you’re looking to develop and plan to change your Sole proprietorship to a Private limited company, we can support you with the consultancy.