Before you register

Sole proprietor or company?
Which is right for you.

In Lesotho, every business must be registered. You have two options:

  1. Register as a sole proprietor.
  2. Create a company.

This page explains the difference, in plain words, to help you choose.

For the full detail on each path, read the sole proprietor guide or the company guide. To compare the four company types, see company types →
Start here

The one big difference

Almost everything else follows from a single question: is your business a separate legal “person”, or is it simply you?

Sole proprietor
You
the person
=
the same
Your business
is you

There is no separate business behind you. The business is simply you. What it earns is yours; what it owes, you owe personally.

Company
You
the owner
separate
The company
a legal person

The company is a separate legal person. It owns its own money and its own debts. As a shareholder, your risk is limited to any amount still unpaid on your shares.

This is why the two paths differ on risk and on what happens over time.

At a glance

Side by side

Sole proprietor
Company
Who is responsible for debts
You are personally liable. The business is you.
The company is. Your risk is limited to any unpaid amount on your shares.
Starting it
A single registration gives you a Business ID, plus a license if your activity needs one.
You incorporate the company (owners, directors, decision rules). It also receives a Business ID. No minimum capital.
What it costs to set up
No fee for a Lesotho resident. (A foreign or non-resident owner pays M500, or M1,500 if turnover is over M5 million.)
M530 to set up: M500 to incorporate, plus M30 to reserve the name.
Yearly cost after that
None just to stay registered.
An annual report to file each year (about M250).
Who controls it
You alone: full control, full responsibility. (More than one owner makes it a partnership.)
Directors run it; 1 to 50 shareholders approve key decisions by set shares of the vote (often 75%, sometimes 50%); at least one director.
Bringing in partners or money
No shares to sell, so it stays a one-owner business.
You can bring in shareholders; new shares are offered to existing owners first.
Paperwork after registering
Keep your records, display your Business ID, and report changes or closure within 14 days.
Prepare a yearly report and file annual financial statements. For a private company these need not be audited.
If you stop, sell, or die
The registration is tied to you and ends on your death.
The company carries on independently; shares can pass to others.
The name
Your own personal name, plus an optional business name for each activity. No “(Pty) Ltd”.
A company name ending in “(Pty) Ltd”, plus optional business names per activity.
Tax
You register with the Revenue Service and receive a TIN.
The company registers with the Revenue Service and receives a TIN.

Fees: the setup amounts above are one-time. The Business ID renews after about three years for a fee. A trade or industrial license, if your activity needs one, is charged separately and renews each year (from about M100, depending on the activity). Amounts can change, so check the current schedule with the OBFC.

About tax: how you are taxed differs between the two. For your own situation, ask the Revenue Services Lesotho (RSL). This page does not give tax advice.

Weighing it up

The upsides and the watch-outs

Both are valid choices. Here is the fair case for each.

Sole proprietor
The simplest way to be in business on your own.
Good for you
  • Simplest and cheapest to start.
  • You keep full control and all the profit.
  • The least paperwork.
  • One registration covers you.
Watch out
  • You are personally responsible for the business's debts.
  • You cannot bring in shareholders.
  • It ends with you.
  • Some partners or lenders prefer a company.
Company
A separate legal person, owned by shareholders.
Good for you
  • Your personal risk is limited to your shares.
  • You can bring in partners and grow.
  • It continues beyond any one owner.
  • It can look more established.
Watch out
  • More to set up, and more steps.
  • Yearly reports and financial statements to file.
  • You may share control with other owners.
  • More rules to keep on top of.
Deciding

Which fits you?

A few honest questions. None of these is a rule. They just point you.

Want to keep it as simple and cheap as possible right now?
Sole proprietorA fine place to start.
Want to keep your personal things (your house, your savings) apart from business risk?
CompanyLean this way.
Plan to bring in partners or investors, or grow beyond yourself?
CompanyLean this way.
Trading on your own, testing an idea, or earning a side income?
Sole proprietorKeeps it light.

Not sure? Many people start as a sole proprietor and form a company later, as the business grows. You register for a Business ID either way, so you are legitimate from day one, whichever you choose.

✓

This page helps you think it through. It is not formal legal or tax advice, and the right choice depends on your own situation. The OBFC registers and supports both, and you can change as your business changes.

Sole proprietor guide Company guide Compare company types
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