Chapter 3 - Forms of Ownership

True or false? In order to have legal personality, the business MUST be registered.

• True

• False

• A business cannot have legal personality

A business with legal persona can...

• enter into contracts in its own name

• own property under its own name

• sue

• be sued

True or false? It is NEVER the business that has limited or unlimited liability, but always the OWNER that has limited or unlimited liability.

• True

• False

If the owner has ________ liability, she could lose her personal assets if the business is not able to pay its debts.

• limited

• unlimited

In SA we have a __________ tax system. This means the more a person earns, the higher the percentage tax that she must pay.

The South African corporate tax rate is...

• 28%

• 48%

• 14%

• 15%

If a business has continuity, only death or the retirement of an owner will affect the continued existence of the business as a legal entity.

• True

• False

• A business can never have continuity

The owner of the business must be involved in the day-to-day running of the business.

• True

• False

If a sole trader encounters financial difficulties, he should consider selling some of the shares in his business to raise more capital.

• True

• False, a sole trader does not have shares

• A sole trader cannot encounter financial difficulties

The fundamental difference between a sole trader and a sole proprietorship is the level of skill required by the owners of the different entities.

• True

• False, there is no difference

• Sole proprietorships do not exist in South Africa