When starting any type of business in Sri Lanka, it’s crucial to choose the right business structure. The structure you pick will affect how your business operates, how it’s taxed, your liability, and how easily you can grow. The most common options in Sri Lanka are:
✅ Private Limited Company (Pvt Ltd)
✅ Sole Proprietorship
✅ Unlimited Liability Partnership
✅ Public Company
However, the most popular choices are Sole Proprietorship and Pvt Ltd Company — and choosing between them can make a big difference for your business’s future.
What is Sole Proprietorship?
A Sole Proprietorship is the simplest business structure: one person owns and controls everything. It’s easy to register and operate — but the owner is also fully responsible for any debts or risks.
What is a Pvt Ltd Company?
A Pvt Ltd (Private Limited) Company is a legally separate entity — meaning the business stands apart from its owners (called shareholders). It can have multiple shareholders and directors, and it offers limited liability protection.
Key Differences Between Sole Proprietorship and Pvt Ltd Company
| Feature | Sole Proprietorship | Pvt Ltd Company |
|---|---|---|
| Ownership | One person | 1–50 shareholders |
| Legal Identity | No separate legal entity | Separate legal entity |
| Liability | Owner is fully liable | Limited to shareholders’ investment |
| Funding | Harder to secure large funding | Easier to secure bank loans & investors |
| Compliance | Simple to set up and run | Requires annual returns, accounting & tax filing |
| Expansion | Limited | Easier to scale and attract partners/investors |
Which is Better for You?
✅ If you want to run a small business or side project, and you prefer low costs and simple setup — Sole Proprietorship works fine.
✅ If you plan to scale your business, raise funds, protect your personal assets, or attract investors — a Pvt Ltd Company is the smarter choice.
Our Recommendation:
While a Sole Proprietorship is great for getting started quickly, a Pvt Ltd Company offers far more advantages in the long run — credibility, limited liability, and easier funding. For entrepreneurs with big plans, the Pvt Ltd structure is often the best way forward.
Conclusion:
There’s no one-size-fits-all answer. You should choose the structure that best fits your business goals and future plans. If you’re unsure, talk to a professional advisor before you register!
