Pty Ltd vs Sole Proprietor: Which Should You Choose?

Quick answer: A sole proprietor is quick and simple, but you are personally liable for business debts. A Pty Ltd is a separate legal person, looks more credible and protects your personal assets in most cases.

Sole proprietor

• You and the business are the same legal person
• No registration with CIPC needed
• Business income is taxed as your personal income
• You are personally liable for business debts

Private company (Pty) Ltd

• A separate legal person that can own assets and sign contracts
• Registered with CIPC, with directors and shareholders
• Pays company income tax
• Usually required for tenders, larger clients and many supplier accounts

How to decide

If you are testing an idea alone, sole proprietor can work. If you plan to employ people, sign big contracts, bring in partners or tender, register a Pty Ltd. An accountant can advise on the tax side for your situation.

We register companies from R990.