Enterprise | Private Limited Company | |
General definition | Refers to Sole Proprietorship or Partnership that can be set up by individual(s). | A business owned by private individual(s) or corporation(s) which enjoy limited liability. |
Owner | For Sole Proprietorship, it needs only 1 person. For Partnership, it ranges from 2 to 20 persons. | 1-50 members/shareholders. |
Liability | Does not provide a separate legal entity and the owner(s) is/are personally accountable for debts and liabilities. | A member’s liability is only limited to the capital that they have invested into the company. It protects the member from risks to personal wealth unless they have made a personal guarantee for the debt. |
Raising of capital | Limited options for an enterprise to raise funds and the owner(s) might have to raise funds at a risk to their personal assets. | More options available as a company can choose to raise funds by way of issuance of new shares or loans from financial institution. |
Taxes | Profit is taxed at personal income tax rate. | Corporate tax can be more beneficial than paying additional individual income tax and there might be some tax-exempt benefits. |
Perpetual succession | The business will be dissolved upon the departure of one or more of the owners. | A company continues to exist despite of the changes in ownership. |
Compliance requirements | Minimal responsibilities. | Stringent requirements. A company is required to conduct annual filings even if a company has become dormant. |
Fees | Relatively simple and low cost to maintain an enterprise. | A company will need to spend significant sums of money to conduct mandatory submissions. |