Legal form of a private enterprise
Should I incorporate my enterprise?
In order to determine the legal form of a PRIVATE ENTERPRISE, the needs and means of the client MUST be determined BEFOREHAND.
- Each legal form of business has its advantages and certain inconveniences.
- The type of legal form is determined on a case-by-case basis.
- Incorporation or a shareholding company
- Advantage: The company has its own legal identity.
- The management company has its own assets.
- So, the advantage of this type of enterprise is, that in the event of financial difficulty, the risk for the individual is limited to his or her capital stock.
- As an example, should a company be sued, go bankrupt or liquidate its assets, the individual’s assets will not be unaffected; however, the company’s stock value will.
- The inconvenience of this form of company is the high level of red tape.
- Also, a minute book must be updated at all times, even if there is only one shareholder.
- The board of directors must meet at least once a year even if it is constituted of only one person. This is also the case of shareholders who must hold yearly meetings.
- There are also annual declaration fees to be paid each year.
- This legal form is the most cumbersome and most costly to administer.
- A limited liability partnership, more commonly known as LLP
- An LLP is a corporation in which a professional and member is only responsible or liable for his or her professional actions, or for those of his or her officer or proxy.
- The LLP does this way eliminate the solidary professional responsibility. In this way, the professional not implicated in a professional fault of a LLP member will not be accountable jand will not be obligated to indemnify the victim as per his or her personal assets. However, the responsibility of LLP will be engaged at the same level as the faulty professional and will to answer as per his own assets. It does assume that the solidary responsability of the associates of an LLP remains with regards to the engagements other than the professional acts.
- The LLP does not give you any fiscal advantage since it is not considered a separate and independent fiscal entity from your associates.
- Sole proprietorship
- Someone who decides to start his own business.
- Nothing formal other than to enter your enterprise at the Business Registry.
- The inconveniences
- The enterprise and the individual are now one and the same. Therefore, the individual will have to pay the debts of the enterprise if it is unable to.
To help you determine the legal form of enterprise suits you the best,