Sole Proprietorship Meaning: - It also called by the name sole trading concern. - It may be defined as a form of business that is owned, managed and controlled by an individual. - He arranges the capital for the business and has the sole responsibility of managing its affairs. - All the profits and losses of the business are to be borne by him alone. characteristics - The sole proprietor invests the business's capital - The sole proprietor owns all ofthe company's assets - The sole proprietor is entitled to all of the company's prots - The sole proprietor bears the burden of all of the company's losses - The sole proprietor is responsible for all ofthe company's debts - The sole proprietor is responsible for all business transactions and matters. Partnership Meaning - - When a sole proprietor expands his business, he may nd it difcult to provide the necessary rnds and managerial skills beyond his present capacity. He, thus prefers to convert his business into partnership. Partnership is thus an expansion of sole proprietary business. - Two or more personsjoin together to carry on a business and share its profits and losses in agiven ratio. Theyjointly contribute capital and managerial skills to run that business. - Minimum 2 members and maximum 100 members are required to from partnership rms. - They agree to share the capital, management, risk and prots of the business. characteristics - It has independent legal entity status; - It must have a minimum of two partners and a maximum specified in the partnership agreement; and - At least one partner must regularly reside in the Maldives. Company Meaning- - company evolved as a suitable form of business organization to operate at large volume of business along with benefits of raising of capital, unlimited liability and pooling of managerial skills. - Company is that form of business organization which is willingly established by some persons for earning profit under the companies Act. - Huge amount of rnds can be collected as members have limited liability. In the event of losses, the maximum amount they lose is their capital contribution. - It is the creation of law and can be dissolved only by law. characteristics - The Maldives must serve as the registered ofce. - Every private rm and every public corporation shall appoint at least two and at least ve directors, respectively, to the Board. - It is necessary to appoint a resident director. - A Memorandum and Articles of Association are required for every firm. The following annual ling and compliance procedures are included: The company's annual report The company's annual nancial statements Procedure to obtain loans or debts - When a company applies for a loan or debt, it typically has to provide a number of documents to prospective lenders, including financial statements, a credit history, and a business plan. Lenders can estimate the risk of lending to the company and decide accordingly with the aid of this information. Importance of corporate veil and its advantages - The legal division between a corporation and its owners is referred to as the \"corporate veil." This can offer some security to the owners because it means they are not personally responsible for the obligations and deeds of the organization. This defense is not impenetrable, though, and it may be contested in some situations. Bankruptcy and Insolvency - Depending on the form of corporate entity, the consequences of bankruptcy or insolvency can differ. Because sole proprietorships and partnerships are frequently more closely associated with their owners, the owners may be held personally responsible for the debts and conduct of the company. While companies and LLCs may be able to restructure through bankruptcy proceedings, the effects on the company and its owners may still be profound