LEGAL REQUIREMENTS TO CREATE A COMPANY
LEGAL REQUIREMENTS TO CREATE A COMPANY
company, business, legal procedures
It is intended to reflect on the different legal aspects related to the creation of your own company, and discover their strengths and weaknesses, so that they can be improved to increase your chances of success.
With the start-up of your company in addition to generating your own employment and of personal satisfaction, you will also contribute to the economic development of your community, and the creation of employment by direct jobs and Indirect that your business path generates.
We analyze clearly and briefly the steps to follow for the launch of a company and the advantages and disadvantages of being an entrepreneur.
ARTIST AND A BUSINESSMAN, KNOWS THE LEGAL ASPECTS
TYPES OF BUSINESSMAN
Types of businessman
A business entity is an organization that uses economic resources or inputs to provide goods or services to customers in exchange for money or other goods and services. Business organizations come in different types and different forms of ownership.
There are three major types of businesses:
1. Service Business
A service type of business provides intangible products (products with no physical form). Service type firms offer professional skills, expertise, advice, and other similar products.
Examples of service businesses are: salons, repair shops, schools, banks, accounting firms, and law firms.
2. Merchandising Business
This type of business buys products at wholesale price and sells the same at retail price. They are known as "buy and sell" businesses. They make profit by selling the products at prices higher than their purchase costs.
A merchandising business sells a product without changing its form. Examples are: grocery stores, convenience stores, distributors, and other resellers
3. Manufacturing Business
Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product. Thus, there is a transformation of the products purchased.
A manufacturing business combines raw materials, labor, and factory overhead in its production process. The manufactured goods will then be sold to customers.
Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).
Nonetheless, these companies may be classified according to their major business interest. In that case, restaurants are more of the service type.
These are the basic forms of business ownership:
1. Sole Proprietorship
A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.
The sole proprietorship form is usually adopted by small business entities.
A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of the business among themselves.
In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners.
A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited involvement in the companys operations. The board of directors, an elected group from the stockholders, controls the activities of the corporation.
In addition to those basic forms of business ownership, these are some other types of organizations that are common today:
4. Limited Liability Company
Limited liability companies, are hybrid forms of business that have characteristics of both a corporation and a partnership. An LLC is not incorporated; hence, it is not considered a corporation.
Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a corporation.
A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefit. The persons making up the group are called members. Cooperatives may be incorporated or unincorporated.
Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative banking, credit unions, and housing cooperatives.
ADVANTAGES AND DISADVANTAGES
Advantages and disadvantages
Being an entrepreneur implies great advantages such as those listed below, and at the same time it is important to analyse the personal implications that a person, or group of people may have, to develop a business project, as well as the inconveniences that comparatively with other professional dedications can introduce oneself.
Among the advantages that we can highlight are the following:
1. Enjoy the satisfaction of being one your own boss, with the power to do things the way you want.
2. Work is created for others, in favor of the improvement of the locality and region, which produces satisfaction on a personal and professional level.
3. At present, the figure of the entrepreneur is gaining prestige, respect and social admiration in an increasing manner, which also rewards from a social point of view.
4. As an entrepreneur you can collaborate in events with the community, which produces personal satisfaction.
5. A personal initiative is shaped and personal challenge is stimulated.
6. It is an alternative to employment, and at the same time it works for oneself.
7. You can make your dream, project or idea come true.
8. Learning and daily knowledge in "the jungle of the market".
9. Increase the circle of relationships and new friendships in the business environment.
10. Long-term rewards can be obtained, contributing to securing the future itself, establishing a retirement savings fund or selling the business at the appropriate time when capital gains are obtained.
On the other hand, in any company creation project there are problems, which we must learn to face and assume with responsibility. Among them, we list some of the most significant for the good progress of the business:
1. Total dedication to the business and customers.
2. The scope of operations is limited by the resources available or has been captured and, sometimes, this causes frustration.
3. It works many hours and intensely.
4. You will never have the level of security of a salaried employee, as well as a limited degree of stress as a worker can have comparatively.
5. Especially the uncertainty about the progress of the business created and the derivative economic-financial risk is supported.
The choice of this legal form may be justified for fiscal reasons and simplicity in the constitution and formal obligations.
The control of the company.
Possibility of obtaining public aid for the start of the activity.
Loneliness of management.
Difficulty finding financial resources.
Tax disadvantage if taxed above 25%.
Limited liability of the partners.
Simple management bodies.
Recommended for small companies with little investment.
- Total outlay of the initial capital.
- Complex transmission of the participations of the partners.
- Few possibilities of attracting foreign capital.
- Limited liability to the capital contributed.
- Free entry and exit of the partners.
- Equal rights of the partners.
- Its purpose is the common good of the partners, not the economic benefit.
- Tax bonuses. IS: 20%
- Certain complexity in its development, and mandatory provision of reserve funds. Carrying social books.
- Limitation on hiring workers (30%)
- Obligation to deposit the annual accounts
Starting your own business is both exciting and challenging. After doing your research, writing a business plan or roadmap, and deciding on a business structure, youâ€™ll want to consider the other legal requirements involved so your business operates with all of the required licenses and permits.
Here are two important legal requirements to review and understand before launching your small business.
1. Business Name Registration
To register your business name youâ€™ll likely register a â€śDoing Business Asâ€ť (DBA) or â€śFictitious Business Nameâ€ť (FBN). This process lets your state or local government know the name you are operating your business under. This registration doesnâ€™t provide trademark protection, but it does allow you to create and use the name you want for branding purposes without having to incorporate.
2. Check which licenses, permits, and registrations your business needs.
Depending on your type of business and where itâ€™s located, you might need specific business licenses and permits from your country, state, county, or city. Licenses, permits, and registrations come in many variations. Examples include local business licenses, building permits, health safety-related permits, permits for home-based businesses, fire permits, industry-related permits (like running a legal practice, hospitality, construction, or manufacturing business), liquor licenses, and more.
The possibilities are many, so make sure to do thorough researchâ€”perhaps with the help of your counselâ€”on what you need to be compliant with the law in your area. Your city or countyâ€™s business licensing agency is also a good place to start.
In the following link you can find all the procedures depending on the EU country
SELF-EMPLOYED IN EUROPE
Sef-employed in Europe
Although it is difficult to draw parallels between the different regimes, because the coverage differs greatly, we briefly summarize the situation of the self-employed in Europe.
Spain: The normal fee for freelancers in 2019 is â‚¬ 283.3 / month covering Temporary Disability in case of common illness, accident or occupational disease, cessation of activity and training.
The coverage of contingencies of occupational accident (AT) and occupational diseases (EP) ceases to be voluntary in 2019 and becomes included in the self-employed contribution of 0.7% that will be part of that 30% of the total applicable rate . These contingencies are added to the common ones that were already obligatory for the self-employed and that now quote at the 28.30% rate. In 2019, the fee for freelancers who meet the requirements for the Flat Rate (a small group) goes from â‚¬ 50 to â‚¬ 60 for new registrations as freelancers as the first of January.
The minimum contribution base of the corporate self-employed as of 2019 also experiences increases, since January 1, the corporate self-employed person quoting for the minimum base assumes a monthly fee of â‚¬ 364.22 / month.
United Kingdom: The minimum rate in the United Kingdom is â‚¬ 14 per month if the monthly income does not exceed approximately â‚¬ 600, since the British system establishes the cost of the autonomous quota based on the income received. However, we must contextualize the information because in the UK the system is progressive, the quota is increasing and, in our country and with those gains they would not be obliged to register in the RETA unless it is usual in the activity, since it found below the SMI.
If the worker himself considers that his income will be greater than â‚¬ 6000, they can pay at most a total fee of â‚¬ 58 monthly.
However, the coverages included are only the basic state pension, the death benefit and the maternity leave.
Holland: There only 50 â‚¬ are paid annually for being autonomous. By clarifying the figure, there is no Social Security fee, so that each self-employed person has to pay a monthly medical insurance (approx. â‚¬ 100 / month), in addition to whether he wants pension and death and disability insurance. There is also no entitlement for IT.
Ireland: There is no monthly or annual registration fee. The amount to be paid will be 4% of income for tax purposes, in other words, gross income less expenses or â‚¬ 500 (whichever is greater). They have health care, contributory state pension, maternity benefit, adoption benefit and widows pension but no unemployment benefit.
Germany: The self-employed quota is â‚¬ 140 in the event that more than â‚¬ 1700 is entered per month. If it is not exceeded, it is not paid.
Differences in benefits play an important role, and that is the same as in the Netherlands, self-employed workers must pay private medical insurance (â‚¬ 150-250 per month). They are not included in their Social Security system, therefore, they bear the health expenses, the pension plan is private and, if they wish to take out additional insurance, they must also take charge.
Portugal: In Portugal there is no fee, but it is paid depending on income, specifically 24.5% of them per year. There is an extended scheme that can reach 32%.
Denmark: The self-employed pay between 25% and 50% of taxes at the end of the year at the end of the year, including Social Security and benefits such as unemployment, maternity or illness.
Italy: There is no fee, the Treasury is paid based on earnings, not income, about 20-30%. A self-employed person must register with the countrys Social Security system, which covers retirement, illness, disability, unemployment benefits and health care.
France: In the French country the first year is not paid. From that moment, there is a tax rate that depends on income and profession, which varies between approximately 12 and 21.3%. In terms of coverage and benefits, health care, temporary disability, widows and disability pensions and retirement are included. As far as health is concerned, the autonomous runs the expenses, although he will then receive a refund from the State of between 65% and 100%.
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