Business Types for Momtrepreneurs

by Claire Minnaar

Moms starting their own business are faced with a number of different choices and decisions – some exciting, some daunting. One of the first things you’ll need to decide on, though, is what kind of business you’re going to have. There are four options:

Sole proprietorship

Only you will own the business. Whatever you own (in your home or business) and whatever you owe (whether personally or in a professional capacity) are considered under one umbrella – they are your assets and debts and there is no separation between what is yours and what belongs to the business. You may call the business whatever you like. However, when completing any formal documents, you will use your own personal name to represent the business, not the name you have called it. You may then add “trading as XYZ”. As a sole proprietor, you do not need to be audited.


Your company can have between 2 and 20 partners to qualify for this category. All of the partners own the business, based on a written legal agreement. It is advisable to get this contract authorised by a lawyer. Again, there is no perceived difference between the company’s assets and debts and those of the individuals. In addition, each partner is held equally responsible for any and all assets and debts. So, if one partner cannot make the monthly payments for his vehicle, this can be claimed from the business, to the detriment of the other partners. The partners can give the business any name but, when completing any formal documents, they will need to write down their own names and then add “trading as XYZ”. No auditing is necessary.

Close Corporation

A Close Corporation (CC) is more like a formal company and is owned and managed by no more than 10 members. There are no directors or shareholders. In a CC, the law differentiates between the assets and debts of the members and those of the company. This is a safer option as you do not stand the chance of losing personal belongings in the case of another member’s financial problems, or the debts of the business. However, signing surety is usually required and the person that signs will be responsible for the debt of the company. When writing the name of the company, you should always end it with “CC”.


Companies have many more laws to obey than the other structures, but are also more protected on an individual and organisational level. A company includes shareholders and directors. The shareholders will invest money into the business and be the owners thereof. They can be the managers, but can also be people from other companies. All assets and debts are separated from the individuals involved in the company, protecting their personal belongings to a large extent. However, those that have signed surety will be responsible for paying outstanding debts of the company. A company’s name is followed by “(Pty) Ltd”. This name can be used on all legal and financial documents. It is mandatory that a company be audited on a regular basis.

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