In Uganda, before one proceeds to start a business or trade, it’s important to know the nature of business, and what form the business is likely to take. This will be beneficial in determining which form of business type to register, and fulfill other necessary requirements.
If you plan on starting a business, it is very important to start off by identifying what type of business you wish to engage in. Depending on your objectives, whether you are starting your business with other people or alone, what and how you intend to benefit from the business- you must decide what form your business must take.
There are different types of businesses and business relationships you can enter into depending on your targets, the list below is of the most common, some of which we have gone further to provide you with information on how you can get them started. They include;
1. Sole proprietorship (entrepreneur) i.e business owned by one person. If you are running a business by yourself- for example a shop, or if you are an artist or writer who works alone- this is a very good option because you are the business as the sole proprietor, you do not need to suffer with the processes or the costs that companies suffer.
2. Partnership i.e a group of two or more persons coming together to carry out a business activity. Where you want to get into a business with a friend or more, whether for a short time with the idea of carrying out a particular activity for profit, this is a good option. This is especially good if your business is of a type that does not need an office for example, if you want to buy maize from farmers in the village and sell it in the town for a profit.
3. Association i.e group of people coming together to achieve common objectives. There are associations that are formed for the purpose of saving money, other associations are formed for public benefit and they usually include many people.
4. Cooperatives e.g for agriculture. Different businesses or entrepreneurs may come together for the common purpose or aim, such as having a greater share in the market or price bargaining power. It is similar to a partnership- only that members in a cooperative do not ordinarily engage in business together but rather benefit through this relationship in other ways.
5. Companies. These are artificial persons who are created through the law and have got the ability to enter into contracts as themselves and own property.
1. Company can hold property in its own name e.g XYZ Limited can own its own land, cars etc.
2. Perpetual succession i.e the company can go on even after the death of the owner. This means the company does not need to come to an end if the owner or founder dies.
3. Limited liability for the members i.e the company can be sued and sue in its own name. In case the company is sued, then the suit will be against the company, as opposed to the entrepreneur being sued.
4. Company can enter into its own contracts, which contracts it can enforce.
5. Advantages when it comes to accessing finance from institutions. Some financial institutions e.g banks require a business to be registered before giving it a loan.