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4 LEGAL FORMS OF BUSINESSES IN CAMEROON
4 LEGAL FORMS OF BUSINESSES IN CAMEROON
What form of business will you like to operate? The legal form a firm chooses to operate under is an important decision with implications for how a firm structures its resources and assets. Several legal forms of business are available to executives. Each involves a different approach to dealing with profits and losses. Choosing the right business form requires a delicate balancing of competing considerations. Learn how to select, plan, and organize the business form that is a perfect fit for you. The forms include:
1. Sole Proprietorship
A sole proprietorship is a firm that is owned by one person. From a legal perspective, the firm and its owner are considered one and the same. On the plus side, this means that all profits are the property of the owner (after taxes are paid, of course). On the minus side, however, the owner is personally responsible for the firm’s losses and debts. This presents a tremendous risk. If a sole proprietor is on the losing end of a significant lawsuit, for example, the owner could find his personal assets forfeited.
In a partnership, two or more partners share ownership of a firm. A partnership is similar to a sole proprietorship in that the partners are the only beneficiaries of the firm’s profits, but they are also responsible for any losses and debts. Partnerships can be especially attractive if each person’s expertise complements the others. For example, an accountant who specializes in preparing individual tax returns and another who has mastered business taxes might choose to join forces to offer customers a more complete set of tax services than either could offer alone.
A corporation is a legal entity that you create to conduct business. The law regards a corporation as an entity separate from its owners. It has its own legal rights, independent of its owners – it can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. The corporation becomes an entity separate from those who founded it-that handles the responsibilities of the organization. Like a person, the corporation can be taxed and can be held legally liable for its actions. The corporation can also make a profit. The key benefit of corporate status is the avoidance of personal liability. The primary disadvantage is the cost to form a corporation and the extensive record-keeping that’s required.
4. Limited Liability Company
A limited liability company or LLC is a hybrid business structure that provides the limited legal liability of a corporation and the operational flexibility of a partnership or sole proprietorship. However, the formation is more complex and formal than that of a general partnership. It is the most common business structure. Most small businesses function in this form.
There are many other legal forms through which businesses can operate in Cameroon but these other forms are more specific and have a set of special criteria which they need to fulfil to be granted the status. It will be a real problem starting up your business without knowing exactly what type of legal form you should operate under. Additionally, not knowing this could cause you more problems in the future.
As you can see the legal form of business determines how much you need to start. Also, it decides the type of operations your business can do. So it essential to make sure you diligently think before you choose the kind of business you wish to do. Most of the time this decision should be guided by the advice of a consultant.
Get to us at +237 654-571-447 we could discuss the legal form which is most appropriate for your business.
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