Types of Business Entities
- Sole Proprietorship
- Association of Persons (Firm)
- Single Member Company
- Private Limited
- Public Limited
- Overview
- Frequently Asked Questions
- Required Documents
- Instructions
A sole proprietorship also known as a sole trader/sole owner, or simply proprietorship is a type of business entity, which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the sole owner (proprietor/trader).
The owner owns all assets of the business and all debts of the business are his debts, he must pay them from their personal resources. This means that the owner has unlimited liability. It is a sole proprietorship in the sense that the owner has no partners (partnership).
A sole proprietor may do business with a trade name other than his or her legal name. This also allows the proprietor to open a business account with banking institutions.
What are responsibilities of a sole proprietor?
The owner can become personally liable for the debts of the sole proprietorship, since there is no legal distinction between the owner and the business. If a creditor sues the business because the business owes them money, they can reach the owner’s own personal property in a lawsuit.
Who has the decision-making powers in a sole proprietorship?
Sole proprietorship is the most straightforward structure for a business wherein the decision making power is in the hands of the owner.
Do we need to register with FBR?
Yes, you need to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).
Do we need to register with Labour Department, Punjab?
Depending on the type of establishment and the number of people employed, registration with Labour Department is mandatory under the "Pakistan Shops and Establishment Ordinance, 1969" or "Factories Act, 1934".
Do we need to register with Punjab Employee Social Security Institution, Punjab (PESSI)?
It is mandatory for an establishment having 5 or more employees, to register with PESSI under the Sub-Section (3) of Section 1 of the Provincial Employees Social Security Ordinance, 1965.
Do we have to pay the 'Professional Tax'?
Yes, professional tax is enforced by the Excise and Taxation Department, Government of the Punjab through Punjab Finance Act, 1977.
For online registration with the provincial departments (Labour and PESSI), no documents are required.
Registering with Labour Department
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Chief Inspectorate of Shops and Deputy Chief Inspectors of shops of respective jurisdiction |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Registering with PESSI
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Concerned Directorate |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
- Overview
- Frequently Asked Questions
- Required Documents
- Instructions
Association of persons (AOPs) includes a firm, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company. "Firm" means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
An AOP is a form of partnership. When two or more people become joint-owners with a view to carry on a business together and sharing the profits and losses in agreed proportions of their investment ratios, they are in a partnership agreement. The Partnership Act, 1932, has defined Partnership as, "The relation which subsists between persons who have agreed to combine their property, labour or skill in some business and to share the profits and losses, thereof, between them.
What are the responsibilities of a partner?
The partners have a duty to:
- Act in good faith
- Carry on business
- Share losses in pre-agreed proportion
- Use firm’s property for the firm
- Account for personal profits
- Be liable individually and jointly
- Work for the greatest common advantage
- Render accounts
- Disclosure
- Indemnify for frauds
- Act within authority
- Transfer interest
Who has the decision-making powers within the firm?
The partners have equal rights and authority to participate in managing the business in the absence of an agreement to the contrary. Each partner has equal vote when matters need to be decided. However, when the contribution of capital to a partnership is not even, the votes are weighted according to the partners’ respective financial interests. When there are several partners, or if there are numerous or complex partnership business activities, the partnership agreement may create classes of partners with different voting and financial rights.
Why do we need to register our partnership with 'Registrar of Firms'?
It is mandatory to register a firm with Registrar of Firms (Industries, Commerce & Investment Department) under The Partnership Act of 1932, as an AOP cannot otherwise exist.
Do we need to register with FBR?
Yes, you need to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).
Do we need to register with Labour Department, Punjab?
Depending on the type of establishment and the number of people employed, registration with Labour Department is mandatory under the "Pakistan Shops and Establishment Ordinance 1969" or "Factories Act, 1934".
Do we need to register with Punjab Employee Social Security Institution, Punjab (PESSI)?
It is mandatory for an establishment having 5 or more employees, to register with PESSI under the Sub-Section (3) of Section 1 of the Provincial Employees Social Security Ordinance, 1965.
Do we have to pay the 'Professional Tax'?
Yes, professional tax is enforced by the Excise and Taxation Department, Government of the Punjab through Punjab Finance Act, 1977.
Is there a specimen of Partnership Deed available?
Yes, a specimen of Partnership Deed is available as reference. Please click here to download.
For registration with the provincial departments (including Registrar of Firms, Labour and PESSI), documents required are as follows:
Registering your partnership with a local partner/company
| Document | Original | Online | Scan | Attested |
|---|---|---|---|---|
| Partnership Deed - Specimen | Yes | - | Yes | Yes |
| Form-1 (Signed printout of the online form) - Specimen | Yes | - | - | Yes |
| Copies of CNIC of Partners | - | - | Yes | Yes |
| Partnership Deed on a stamp paper of PKR 1000 | - | - | Yes | Yes |
| Bank Challan | Yes | - | Yes | - |
| In case of company partnership, following additional documents are required: | ||||
| Memorandum & article of association | - | - | Yes | Yes |
| Board Resolution | - | - | Yes | - |
| List of Directors | - | - | Yes | Yes |
| Incorportaion Certificate | - | - | Yes | Yes |
| Note: The documents should be attested by SECP. | ||||
Registering your partnership with a foreign partner/company
| Document | Original | Online | Scan | Attested |
|---|---|---|---|---|
| Signed printout of the online form (Form-1) | Yes | - | - | Yes |
| Partnership Deed | - | - | Yes | Yes |
| Bank Challan | Yes | - | Yes | - |
| Passport of foreign partner | - | - | Yes | Yes |
| NOC from Home Department in respect of foreigner | Yes | - | - | - |
| Affidavit from Pakistani Resident about reliabilities of foreigners | Yes | - | - | - |
| In case of company partnership, following additional documents are required: | ||||
| Memorandum & article of association (Translated version) | - | - | Yes | Yes |
| Board Resolution (Translated version) | - | - | Yes | Yes |
| List of Directors (Translated version) | - | - | Yes | Yes |
| Incorportaion Certificate (Translated version) | - | - | Yes | Yes |
| Note: The attestation should be done by the concerned embassy. | ||||
Note: Please dispatch the set of documents (Partnership Deed (attested copy), Form 1 (original), Witness form (original), Paid Challan (original) to the following address:
Registrar Of Firms, Poonch House, Multan Road, near Choburji Lahore.
Registering with Registrar of Firms
| Type | Instructions |
|---|---|
| Service Fee | PKR 2000/- |
| Approving Authority/ Delivery Time | 24-48 Hours |
| Issuance Authority | Registrar of Firms |
| Fee Payment Mode | Bank Challan/Online |
| Designated Bank with Head Account (Name and No.) | National Bank of Pakistan, Head Account: "C.O 3545" |
Registering with Labour Department
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Chief Inspectorate of Shops and Deputy Chief Inspectors of shops of respective jurisdiction |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Registering with PESSI
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Concerned Directorate |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
- Overview
- Frequently Asked Questions
- Required Documents
- Instructions
A single member company is a class of private company, limited by shares, which is incorporated with one member, or whose membership is reduced to one person. It shall not issue an invitation to the public to subscribe for any share of the company.
Moreover, the company shall not register any shares in the name of two or more persons to hold one or more shares individually or jointly; and number of members of the company shall be limited to a single person. Every single member company shall have at least one director.
For any further details, visit SECP.
What are responsibilities of a Single Member Company?
The liability of the member is limited to the amount of its investment and the existence of a company does not cease on the death of a member.
Who has the decision making powers in a Single Member Company?
Single member of a single member company has complete control over how the business is operated. The single member may make all business decisions independently and receive the full share of distributed profits. Any matter that is to be decided by directors as required by the ordinance or rules and regulations made thereunder shall be deemed to be satisfied, if the decision is taken by a sole director of the company and is properly recorded in the minutes' book.
Why do we need to register the company with SECP?
It is mandatory to register a company with SECP under Securities and Exchange Commission of Pakistan Act, 1997, as a company cannot otherwise exist.
Do we need to register with FBR?
Yes, you need to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).
Do we need to register with Labour Department, Punjab?
Depending on the type of establishment and the number of people employed, registration with Labour Department is mandatory under the "Pakistan Shops and Establishment Ordinance 1969" or "Factories Act, 1934".
Do we need to register with Punjab Employee Social Security Institution, Punjab (PESSI)?
It is mandatory for an establishment having 5 or more employees, to register with PESSI under the Sub-Section (3) of Section 1 of the Provincial Employees Social Security Ordinance, 1965.
Do we have to pay the 'Professional Tax'?
Yes, professional tax is enforced by the Excise and Taxation Department, Government of the Punjab through Punjab Finance Act, 1977.
For online registration with the provincial departments (Labour and PESSI), no documents are required.
Registering with Labour Department
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Chief Inspectorate of Shops and Deputy Chief Inspectors of shops of respective jurisdiction |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Registering with PESSI
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Concerned Directorate |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
- Overview
- Frequently Asked Questions
- Required Documents
- Instructions
Private Limited Company means a company where:
- Shareholders cannot sell or transfer their shares without offering them first to other shareholders for purchase
- Shareholders cannot offer their shares to the general public over a stock exchange
- The number of shareholders cannot exceed a fixed figure (commonly 50)
- The shareholders' liability is limited to the shares held by them
- The lifespan of the company is indefinite; its existence does not cease with the death of a director or shareholder
For any further details, visit SECP.
What are responsibilities of a Private Limited Company?
The board of directors of a private company is primarily responsible for
- Determining the strategic objectives and policies of a company
- Monitoring progress of operations and business activities towards achieving the objectives and policies
- Appointing senior management
Who has the decision making powers in a Private Limited Company?
Given below are some of the decision-making powers of a director
- Borrow money
- Investment of funds in a company
- Make loans
- Approve employees’ bonus
- Consider the long-term prospects of a company and its reputation
Why do we need to register the company with SECP?
It is mandatory to register a company with SECP under Securities and Exchange Commission of Pakistan Act, 1997, as a company cannot otherwise exist.
Do we need to register with FBR?
Yes, you need to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).
Do we need to register with Labour Department, Punjab?
Depending on the type of establishment and the number of people employed, registration with Labour Department is mandatory under the "Pakistan Shops and Establishment Ordinance 1969" or "Factories Act, 1934".
Do we need to register with Punjab Employee Social Security Institution, Punjab (PESSI)?
It is mandatory for an establishment having 5 or more employees, to register with PESSI under the Sub-Section (3) of Section 1 of the Provincial Employees Social Security Ordinance, 1965.
Do we have to pay the 'Professional Tax'?
Yes, professional tax is enforced by the Excise and Taxation Department, Government of the Punjab through Punjab Finance Act, 1977.
For online registration with the provincial departments (Labour and PESSI), no documents are required.
Registering with Labour Department
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Chief Inspectorate of Shops and Deputy Chief Inspectors of shops of respective jurisdiction |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Registering with PESSI
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Concerned Directorate |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
- Overview
- Frequently Asked Questions
- Required Documents
- Instructions
A Public Limited Company is one where the shares are offered to the general public and can be acquired by anyone, either privately, during an initial public offering or through trades on the stock market. The company is strictly regulated, and is required by law to publish its complete and true financial position so that investors can determine the true worth of its stock (shares).
For any further details, visit SECP.
What are responsibilities of a Public Limited Company?
The board of directors of a private company is primarily responsible for
- Determining the strategic objectives and policies of a company
- Monitoring progress of operations and business activities towards achieving the objectives and policies
- Appointing senior management
- Accounting for the activities to relevant parties of a company, e.g. shareholders
Company directors are responsible for the management of a company. Therefore, they must promote the success of a business for the benefit of shareholders. They are also responsible for the employees of a company and its trading partners. The director of a company is assigned certain powers and he or she must not abuse those powers or use them irresponsibly.
Who has the decision making powers in a Public Limited Company?
Given below are some of the decision-making powers of a director
- Make calls on shareholders in respect of money unpaid on their shares
- Issue shares, debentures, term certificate, or any instrument in the nature of redeemable capital
- Borrow money otherwise than on debentures
- Investment of funds in a company
- Make loans
- Approve employees’ bonus
- Consider the long-term prospects of a company and its reputation
Why do we need to register the company with SECP?
It is mandatory to register a company with SECP under Securities and Exchange Commission of Pakistan Act, 1997, as a company cannot otherwise exist.
Do we need to register with FBR?
Yes, you need to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).
Do we need to register with Labour Department, Punjab?
Depending on the type of establishment and the number of people employed, registration with Labour Department is mandatory under the "Pakistan Shops and Establishment Ordinance 1969" or "Factories Act, 1934".
Do we need to register with Punjab Employee Social Security Institution, Punjab (PESSI)?
It is mandatory for an establishment having 5 or more employees, to register with PESSI under the Sub-Section (3) of Section 1 of the Provincial Employees Social Security Ordinance, 1965.
Do we have to pay the 'Professional Tax'?
Yes, professional tax is enforced by the Excise and Taxation Department, Government of the Punjab through Punjab Finance Act, 1977.
For online registration with the provincial departments (Labour and PESSI), no documents are required.
Registering with Labour Department
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Chief Inspectorate of Shops and Deputy Chief Inspectors of shops of respective jurisdiction |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Registering with PESSI
| Type | Instructions |
|---|---|
| Service Fee | Nil |
| Approving Authority/ Delivery Time | Real Time (There & Then) |
| Issuance Authority | Concerned Directorate |
| Fee Payment Mode | Nil |
| Designated Bank with Head Account (Name and No.) | Nil |
Benefits of
Registering
with
Punjab Employees Social Security Institution
Punjab Employees Social Security Institution (PESSI) is an autonomous body under Labour and HR Department of Punjab, which provides a number of benefits to the secured workers and their dependents of Industrial Units.
Benefits
Registration with PESSI works like an insurance scheme for the secured workers and their dependents, which entitles them to various benefits, including comprehensive medical care besides the following additional cash benefits:
Sickness Benefit
75% of the wages up to 121 days in a year. In case of T.B/Cancer Sickness benefits, it is paid at 100 percent of wages for 365 days.
Injury Benefit
100 percent of wages up to 180 days in a year
Maternity Benefit
It is admissible to concerned woman at 100 percent of her wages for 6 weeks pre-natal and 6 weeks post-natal
Disablement Gratuity
As determined by the Medical Board, disablement gratuity is given to a person in case of 5 percent to 20 percent of disability.
Partial Disablement Pension
This pension is given in case of partial disability, i.e., if a person is 21 percent to 66 percent disabled, along with free medical care facilities for life. The amount depends on wages and the degree of disablement.
Total Disablement Pension
This pension is for total disability if disability exceeds 66 percent. It equals 100 percent of the wages along with free lifelong medical care.
