What the law says about a CC(in a nutshell):
Once registered with the Companies and Intellectual Property Registration Office (CIPRO), a CC is considered a legal person, owning its assets and trading in its own name. A CC then:
May contract with other parties or be sued in a court of law. So if someone is hurt in the course of doing business, for example, your CC will be sued, not you.
Keeps on existing, with its own assets and debts, even after the death of its owners (called members). It exists forever (or until it is formally de-registered) and is sold by selling the CC's "shares" (formally, "shares" in a CC are called "membership interest"); and
Is taxed separately from its owners. Just like a company, a CC is taxed at 30% of all the profit it makes (there are some tax breaks as well as complications). You, the owner, will be taxed as a separate tax payer on the salary you draw from the CC, whether the CC makes a profit or not.
What are the best reasons for registering a CC?
The assets of the business are clearly separated from those of its owner(s). This means that it becomes much easier to allow for:
Other partners to buy into the business
The buying-out of partners who wish to get out of the business
The sale of the whole business as a going concern; and
Should one of the owners die, the winding up of his estate.
Protecting the personal assets of the owners from the liabilities of the business. Theoretically, if the CC's fails to pay debt, the creditor cannot come after the assets of the owners of the CC. The CC is sued for the debt, not its owners. But in practice this is often negated by the fact that creditors insist that the owners also sign personal liability for the debts of the CC.
