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What type of business is our company?
My wife was a teacher in a private school but as a result of the closure of schools due to the pandemic, she started a catering business. My wife is going back to work and we have decided to put me in charge of the business.
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We want to establish it properly as a company to be better placed to provide food to institutions. I am aware that there are several types of companies in Ghana. I would be very grateful if you could recommend the type of company we should use for the business.
Akwasi, Takoradi
Dear Akwasi,
There are many types of business organisations that can be used to start up a business enterprise. These include limited liability companies, partnerships and sole proprietorships.
The type of business organisation anyone chooses may depend on many factors, including the requirements for setting up the business.
In Ghana, a sole proprietorship is one of the simplest ways of starting a business. This is because it is a business where one person owns and runs the business.
The majority of small and medium-scale enterprises in Ghana are operated as sole proprietorships.
Sole proprietorships are governed by The Registration of Business Names Act, 1962 (Act 151).
When it comes to registration, sole proprietorships have straightforward and simple procedures. In general, a sole proprietor has to register the name of the business as well as the general nature of the business.
Therefore, you have to come up with a business name, which can either be your own name or a name specifically for the business.
Further, you have to state the nature of your business. Additionally, a sole proprietor has to state the principal place of business, as well as other places where the business may be operated from. Furthermore, certain personal details will be required of a sole proprietor such as name, nationality, residence and date of birth, as well as the date on which the business commenced.
Setting up a business as a sole proprietor is relatively inexpensive and simple as compared to other forms of business organisations.
A sole proprietor enjoys all the profits the business makes given the fact that he owns and runs the business alone. However, a sole proprietor bears all the loss, risk and liabilities attached to the business.
There is no legal separation between the owner and the business. Therefore, a sole proprietor personally bears all the liabilities associated with running the business.
Given how simple it is to start a business as a sole proprietor, I would encourage you to consider this model for your catering business. I wish you all the best.