A sole proprietorship is when a single person owns and runs the business. This is the simplest form of business entity because the business is not separate from you as the owner.

Advantages: 

• No registration is required it is quick and simple to set up and you can give your business a trading name
• You maintain 100% control and ownership of the business
• You are entitled to all of the profits

Disadvantages

• You, as the owner, assume all the risk for the business. Your assets will be seized to pay for business debt, and you are personally liable for any obligations
• If you wish to include another owner in your business, you must dissolve the sole proprietorship and form a new business entity
   

A partnership is when two or more co-owners run a business together.

Advantages:

• With more people means more knowledge and expertise as partners share specialised skills and resources
• Partners pool their money towards a common goal: you’ll have more capital and cash to work with and you share the financial burden and expenses of running the business
• Having partners means there is a distribution of labour and you’ll have a better work-life balance with others there to assist you

Disadvantages:

• Everyone is liable for debts whether they were caused by other partners or not
• You have to share control of the business with your partner(s)
• Dealing with others is not always easy, there could be a falling out or an argument, which can strain the relationship between you and your partner(s)
• If you ever want to sell your business, this could prove difficult if others don’t want to sell

A private company, Pty Ltd, or proprietary limited company, is a separate legal entity. Even if you launch your business single-handedly, this type of business is registered as a separate legal entity. There are many legal requirements when setting up a private company and it is highly advisable to use a professional.

Advantages: 

• It gives you a professional image
• It allows several people to share in the ownership of a business and makes it easier to sell portions or all of it to future buyers
• An accountant can help ensure that you are running things properly and following the law
• Debts of the company belong to the company; your personal assets are safe. And anyone acting recklessly or fraudulently can be personally liable for all or any debts of the Pty Ltd

Disadvantages

• Administration and set-up costs are higher and will include annual fees payable to CIPC
• Private companies have to comply with a large number of legal requirements
• All your financial statements need to undergo annual auditing