Tuesday, November 16, 2010

Differences between a Business Name (Sole-Proprietorship / Partnership) and a Limited Liability Company

While consulting for our online company registration service, Incorporator I find myself answering the question "What is the difference between a sole-proprietorship and a company?"

Anybody who is considering starting a business must consider what type of business structure is needed for his or her particular situation. In Kenya there are three types of structures that one can use to start their business.

1. An LLC, or Limited Liability Company
2. A sole proprietorship
3. A Partnership

A Sole-proprietorship and a Partnership are registered through the same manner (Form BN/2) with the exception that a partnership has more than one owner and although not necessary, entrepreneurs are advised to register a partnership deed as well. In this article all references to sole-proprietorship also include partnership.

Understanding the advantages and disadvantages of each structure is important when deciding which one you want to use for your company.

 Legal Protection

The first major difference between a sole proprietorship and an LLC is the legal protection that each affords their owners against lawsuits. In a sole proprietorship, the individual owner(s) and the business are one and the same. This means that if someone sues the business, then the personal assets of the owner(s)—car, home, etc.—can be seized in any judgment against the company.

On the other hand, if your company is organized as an LLC, the company is a separate entity from the owner. If a person sues the company, only the assets of the company can be used to pay any legal judgment. The personal assets of the owner are safe.

Of course, this protection is limited. If the owner is personally negligent for wrongdoing by the company, then the liability protection is not going to stop victims of his or her negligence from being able to come after their personal assets.

Credit

Most new businesses require some type of capital to get started. Because a sole proprietorship is founded on the name of the person who owns the company, any credit and debt is the sole responsibility of that person. If the business fails and loans cannot be repaid, the owner of the company is completely liable for that bad debt. With an LLC, the business is a separate entity from the owner. This means that if the business should fail, in most cases, the debt would not be the sole responsibility of the owner.

In addition, how a business applies for credit and financing differs with each business entity. With a sole proprietorship, the credit history of the owner is the sole basis in determining whether the business is a good credit risk. If the owner has bad credit, getting the business financed is going to be much more difficult.

Because an LLC is separate from the owner, getting financed can be easier. Especially after the business has been in existence for a few months, many banks will begin to look at the credit record of the company to determine its credit-worthiness. This is obviously a major advantage to the business owner.

Legal Requirements

Another major difference between these two business entities is the requirements to maintain the legal status. Because a sole proprietorship is a business based on the name of the owner, no special fees are typically required. While the business will probably still need to obtain a business license in the area in which it is doing business, the company will not have to file annual returns every year declaring its status.

Cost of Registration
A sole-proprietorship is usually cheaper to register than an LLC. We charge KES 3,999 to register a sole-proprietorship and most advocates will register companies from around KES. 25,000.

Taxes
A sole-proprietorship being owned by one person files taxes under Individual Income Tax and the PIN certificate used is usually that of the owner. A partnership usually has its own PIN certificate but the rates of Income Tax are usually the same as that of a sole-proprietorship. An LLC must register its own PIN/VAT certificate and is charged corporate tax of 30% of profits.
 In the end, deciding which type of business entity is right for you is dependent upon your personal circumstances. Things such as your type of business, where you are doing business, and your personal financial history all come into play. Anyone who is considering starting a business truly should consult to determine which entity is best for his or her situation.

Friday, November 12, 2010

Who is Eva? BPO for small businesses? Really?

In the January of 2002 a young man found himself battling against frustration and despair as he saw his barely four month old company go up in smoke. It was his first real business venture and he had sunk all of his meagre savings into it, only to find himself unable to convert his enthusiasm into sales.

Four months without a single sale he only had well worn shoes to show for his effort.

When he started the business, he thought he had it figured all out. He had bought a mobile phone and a decent second-hand computer and sublet a small office in town. He listed down 500 prospects, wrote an introduction letter, and proceeded to call and visit the prospects. Four months and several disappointing calls and visits later, he had only managed to see a handful of prospects and none were yet to give him any business. Meanwhile his landlord was on his back asking for rent and he had run out of money to make telephone calls. He had no option but to close down his fledgling business.

For the next three months, his business remained closed as he worked on raising more capital. Finally decided to get a job in order to raise some money; so he brushed up his CV and went job hunting. Within a short time he was lucky to land himself a job as a techie to one of the most successful entrepreneurs in the town. He knew he would learn a lot from working for the Boss, but he never knew how much until the day he met her.

From the first day he met Stella he knew he was in love. But it was not the love that a young man feels for a woman, but a love of something so efficient it was a joy to behold. Stella, an executive secretary with over twenty-five years experience, knew her job very well. She worked as the personal assistant to the Boss, but seemed to help his business in so many other ways.

The young man’s job had him working a lot with Stella and he had time to observe the effective manner she undertook her job. He marveled at how she seemed so confident and organized in her tasks. She seemed to know everything about the business, even more than the Boss.

Stella handled the Boss’ diary, she spoke to his customers and suppliers, checked and responded to his emails, and generally kept his office running smoothly. Stella seemed to juggle all these tasks with ease and never lost her professionalism.

The young man realized that a large part of the Boss’ success could be attributed to Stella. Without Stella the Boss might have been just like the young man was those long four months. The young man kept this lesson, and after saving for a few more months he left the job to go back to business and use the knowledge and skills he’d picked up.

With time, the young man got his own “Stella” and just like the Boss before him his business flourished under the efficient stewardship of the office by his “Stella”. Elated by how well this worked for him, he decided he would share “Stella” with all other entrepreneurs whose great business ideas failed to take-off as they got swamped by the routine day-to-day operations of a business.

At Business Made Simple we have taken all the good things that made “Stella” so effective and put them into Eva. But we haven’t stopped there; Eva is not a single person but a team of people with a diverse set of business and technical skills guided by a strong sales strategy that we help you develop. Eva is a super-secretary, a one stop shop for all your administrative human resource requirements.

Benefits of Eva.

As a small business owner working with limited resources and a tight budget it is critical to only use products and services that positively contribute to your bottom line. Hiring Eva, can provide several benefits to your business.

It is estimated that entrepreneurs running small businesses spend upto 40% of their time undertaking routine admin tasks. This could be checking or writing emails, setting appointments, doing research, generating new sales leads or looking after existing customers. While all these tasks are important, they do not positively contribute to the bottom line.

Save Times allowing you to do what you’re good at.
If you hire Eva to handle these and other routine tasks you will immediately notice the fantastic amount of your time you free up; and we all know time = money especially with small businesses.With the freed up time, you can concentrate on what you’re good at in the business, whether it is making architectural drawings, farming tomatoes, or taking photographs. With more time on your hands, this can equal more money and a higher return on investment on your time. The free time also allows you to take time off and spend it with your friends and family; the business should not be your life.

Save on Labour Costs
Hiring Eva allows you to benefit tremendously from the high quality skills Eva provides as a team of professionals with an unbelievably low price. With the starting KShs. 5,900 package per month, you get access to a professional web designer, a business consultant with 10 years experience, a personal assistant, a sales executive, a telemarketer, and an internet marketer. Eva helps keep your labour costs low while providing high value human resources.

Save on Office Equipment Costs
With Eva, you do not need to purchase office equipment, hire office space, or pay for utilities like telephone and internet. All these facilities are included in the price you pay for Eva. In fact, if your job is mainly service based you can even work from home! Eva saves you tens of thousands of shillings a month you’d otherwise have to pay on this equipment.

Boost your Revenue
Research has shown that with an effective telemarketing and internet marketing campaign, you can boost your revenues by more than 150%. What are you waiting for? This alone is reason enough to hire Eva today and experience growth in your sales and satisfaction of your customers. With the business consultant, sales and marketing executives you get an end-to-end marketing package that makes sure your products and services are continuously being introduced to new and existing customers.

If you want to hire Eva right away, simply follow this link. If you still need further information, call us on +254 751 773 087 or email us at sales@eva.co.ke for a free 30 minute consultation on what your business can gain through Eva.

Articles first published on www.eva.co.ke