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If you are currently running a business, the legal framework you’re operating under could be a sole trader, partnership, private or public limited liability company or a non-profit organisation. Either of these institutions offer benefits or drawbacks to the owner.

It’s advisable that you take some time to reflect on the current structure to see if serves your purpose. Will you achieve your goals effectively through that structure? Some of these structures can expose you to unfavourable political, economic or legal factors. You, as the owner, need to ensure that the value of the business is safeguarded because the legal framework you choose will have an effect on your tax or legal liability, and also can impact negatively or positively on the growth potential of the business.

As an entrepreneur, don’t leave the law to decide on what legal structure you are operating under when issues do arise in the future. Make a decision now on the most appropriate legal framework that will address your future needs. If you are yet to start a business make the right decision now on the best legal framework before starting your business. The structure you choose now will affect operating efficiency, transferability of ownership, control, the way you report income, the taxes you pay and your personal liabilities. If you don’t know which route to take consult your lawyer or accountant for advice because certain tax laws might make it difficult to change your legal structure after you commenced operations. In deciding on the legal structure you should consider the issues discussed below.

The kind of business you intend to have can determine the structure you should choose. If you are providing auditing, accounting or legal services, a partnership would be ideal. Other businesses would do well with a sole trader or a limited liability company. So look at the industry you will be operating in and see which legal structures are appropriate. You don’t have to make this choice in isolation. You also need to consider other factors as well which are discussed below.

The other consideration is the cost of setting up the business. Some structures are easy and less expensive to set-up with minimal amounts of paperwork and red tape. Costs that you would normally incur in setting up a business are registration and business license fees.

Some more complex business structures will general be more expensive to set up and require more time to administer the business. You need to factor this during the start-up phase. The Registrar of Companies will require annual returns to be submitted and in some cases you have to submit audited financial statements.

The anticipated size of the company can also have a huge influence on what type of business structure to adopt. How many individuals will be a part of your business and the future prospects or vision will determine the size this business will be. If you expect your business to grow then you need to seriously consider how you will raise the capital for future expansion. You need to have the end in mind. A sole trader or a partnership might be restricted in the ability to raise capital. Until your business has grown and has gained a good credit rating, it will usually be difficult to get business loans which would help your business grow. On your own it’s very difficult to grow the business faster because there are limitations and it takes time to raise adequate capital to grow the business. So if your vision is to grow the business it would be advisable to set a legal framework that will allow this.

Another important consideration is how much control you want to exercise in your business. If you want to own and run the business completely alone then you might choose a sole trader. Control has to do with who is the decision maker in that enterprise. The decision maker will control the management of the business, determine who receives profits, decide whether to get loans or invite outside investors, and be solely responsible for the company’s financial performance.

Tax liability is a major factor to consider when setting up a business. The amount of taxes paid yearly can make or break a business. Some structures are efficient on tax planning whereas in others you will not enjoy some of the tax breaks that you get in other legal structures.

When selecting a legal structure you should think of how much personal liability you would want to carry in the business. Some legal structures do not protect personal assets from business debts. In a sole trader you will have unlimited personal liability. As a sole trader, you will be responsible for all debt incurred by the business. It’s therefore very important to choose a structure that will separate your personal assets from business operations, that way you will protect your personal assets.

You should also consider how easy it is to transfer your ownership to another person. Depending upon the legal structure, a person’s ownership in a business may be transferred, on retirement or if deceased, to another owner in whole or in part simply by the exchange of a document.

Not all business forms are perpetual, they can’t continue into the future after the owner has died. Some forms of business cease when the entrepreneur exits the business. It is therefore important to consider the continuity of existence of your business. If you want the business to be terminated upon your death then becoming a sole trader is the most appropriate option but if you wish to secure your family’s financial future, it is more appropriate to select a legal structure that does not come to an end if you are incapacitated.

To have peace of mind choose the right business structure that aligns with your business’ strategy and goals.

About the author

Stewart Jakarasi is a business & financial strategist and a lecturer in business strategy and performance management. He provides advisory and guidance on leadership, strategy and execution, preparation of business plans and on how to build and sustain high-performing organisations. For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: or +266 58881062 or on WhatsApp +266 62110062

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LEC to switch off households over debts



MASERU – The Lesotho Electricity Company (LEC) will from Tuesday next week begin switching off clients who owe it money.

The LEC issued a seven-day ultimatum to all customers who owe it on Tuesday last week. The deadline ends on Monday.

It is expected that the LEC will begin switching off households that have defaulted.

The state-owned power company, however, is not going to touch any government department or business entities that owe it on grounds that they are in payment negotiations.

The LEC move comes barely two weeks after it cut electricity supplies to the Water and Sewerage Company (WASCO) thus causing it to fail to pump water to communities countrywide for more than two days.

The LEC says it is owed close to M200 million by government departments, businesses and individuals.

The LEC spokesman, Tšepang Ledia, told thepost that the government and the businesses will not have their electricity cut because they are in negotiations.

“We are in negotiations with the government and businesses and hopefully they will pay,” Ledia said.

“We advise the ordinary people to pay their debts before the 20th of March 2023 or else we cut the services,” he said.

The LEC says it is running short of funds for its daily operations.

In December last year the company increased power tariffs by 7.9 percent on both energy and maximum demand charges across all customer categories for the Financial Year 2022/23.

Last week the LEC boss, Mohato Seleke, said postpaid consumers and sundry debtors owe the company M169.4 million.

He said unless the debtors pay he will be unable to buy electricity from ’Muela Hydropower Project, Eskom in South Africa and Mozambique’s EDM.

This, he said, could cause serious load shedding in the country and could be devastating for businesses.

Seleke said the LEC spends M630 million monthly to buy electricity.

“If postpaid consumers do not settle their debts this could prevent the LEC from being able to buy electricity which can lead the country to encounter load-shedding,” Seleke said.

Seleke said collecting debt from government department ministries was a challenge as there is an understanding that since LEC is a state-owned company, it will continue supplying government agencies with electricity and they will settle their bills when they have funds to do so.

Seleke said the LEC has lost M21 million to vandalism during this financial year.

Relebohile Tšepe

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Bumper payout for former mineworkers



MASERU – AT least 11 316 current as well as former mine workers are set for a bumper payout after Tshiamiso Trust began disbursing the first billion Maloti to workers who are suffering from silicosis and tuberculosis.

The payment comes two years after Tshiamiso Trust began processing claims for the historical M5 billion settlement agreement between mineworkers and six gold mines in South Africa.

Speaking at the payment announcement in Maseru last week, the Trust’s CEO, Lusanda Jiya, said it has been two years since they officially began accepting claims.

“Our people come to work every day with the mission of impacting lives for the better, and the first billion rand paid out to over 11 000 families is just the beginning,” Jiya said.

“We know that there is no compensation that will ever be enough to undo the suffering endured by mine workers and their families,” he said.

“However, we are committed to deliver our mandate and ensure that every family that is eligible for compensation receives it.”

Jiya said the Trust is limited both in terms of the time in which they can operate, and the extent to which they can assist those seeking compensation.

Broadly speaking, the eligibility criteria include among others that the mineworker must have worked at one of the qualifying gold mines between March 12, 1965 and December 10, 2019.

Secondly, living mineworkers must have permanent lung damage from silicosis or TB and deceased mine workers representatives must have evidence that proves that they (the deceased) died from TB or Silicosis.

Tshiamiso Trust has a lifespan of 12 years, ending in February 2031.

Over 111 000 claims have been received to date, through offices in South Africa, Lesotho, Botswana, eSwatini, and Mozambique.

The Trust is working with stakeholders in these countries and others to mobilise its efforts and expand operations.

The history of silicosis in South Africa goes back to the late 1880’s when the first gold mines began operations.

The gold was stored and locked in quartz, a special rock that contains large amounts of silica.

Crystallised silica particles can cause serious respiratory damage if inhaled.

In the earlier days of gold mining, dust control, health and safety standards and the use of PPE (personal protective equipment) were not as advanced as they are today.

Tshiamiso Trust was established in 2020 to give effect to the settlement agreement reached between six mining companies.

The companies are African Rainbow Minerals, Anglo American South Africa, AngloGold Ashanti, Harmony Gold, Sibanye Stillwater and Gold Fields.

The settlement agreement was reached and made after a ruling by the Johannesburg High Court as a result of a historic class action by former and current mineworkers against the six gold mines.

Justice for Miners is a coalition of interested parties in the mining sector launched at the Nelson Mandela Foundation in Johannesburg in 2020.

The Johannesburg High Court approved the setting up of the Tshiamiso Trust to facilitate payment by the companies to affected miners.

Keith Chapatarongo

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Farmers cry over cost of livestock feed



MASERU – Lehlohonolo Mokhethi is a farmer who has been running a successful poultry business, thanks to a small loan he got from a local bank.

He now has 300 chickens.

He says his vision is to rear 5 000 chickens by 2025 and employ 30 youths. But he is now grappling with a new challenge: the ever increasing cost of chicken feed.

That is threatening the viability of his business.

“The biggest challenge is that food prices increase every day, feeding is expensive,” Mokhethi said.

“It is quite difficult to make profit in business if each and every day food prices increase. Today I am buying a bag of food with a certain amount then the next day the price has increased,” he says.

“Our customers fail dismally to understand that food has increased and the Chinese are taking our market because they sell at a low price thus I run at a loss.”

Last week, a top attorney in Maseru who is also a prominent farmer, Tiisetso Sello-Mafatle, called a meeting for farmers to discuss these challenges.

She says the government must regulate the prices of livestock feed.

That is critical if the farming business is to succeed, she says.

Attorney Sello-Mafatle says farmers must come up with a structure for livestock feed prices which they would present to the government for gazetting.

“We should state our regulations and give them to the government to make everything easy for both parties because we cannot wait for the government to make regulations for us,” Sello-Mafatle says.

She adds that “farmers should be bullish about what they want and never have fear endorsing new things”.

“I will not be challenged or cry (because of) what life throws at me but I will cry when things are not happening the right way,” she says.

Mafatle says farmers need to know who they are and know the capabilities they have.

“This will help a farmer in becoming the best in any field they are in once they are confident about themselves,” she says.

Karabo Lijo, another participant, said they have to influence the cost of inputs in agriculture, especially livestock feed.

“We have to go back to cost-price analysis where as farmers we are able to derive the selling price and the break-even point in our production,” Lijo said.

“We can also derive the stable or constant mark-ups on our products,” he said.

“We need to do research to increase the ability to produce byproducts which are likely to have the longest shelve life,” he said.

The meeting urged farmers to diversify their products by introducing such things as mushroom farming. They said mushrooms can grow very well in Lesotho due to its favourable climate.

The farmers also demanded that there should be regulations on how land can be sold or borrowed in Lesotho.

Tholoana Lesenya and Alice Samuel

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