Career
Start your own business.
It is very common to have a new business idea, or a special skillset; however, the appropriate knowledge might be missing for the business to actually take form. Choosing the most suitable type of business will build strong foundations for the development of a healthy and productive career.
Business types and their basic features
A sole proprietorship is the simplest type of business. That is because the owner and the business entity are directly linked, as they have the same Tax Identification Number (TIN/AFM). Nowadays, starting a sole proprietorship is fairly easy compared to the past. The establishment cost is not very high and the procedure itself is relatively quick.
General – Limited Partnership The differences between a general and a limited partnership are few these days, mainly with regard to tax matters. The tax rate for both is stable and the taxation of their profits is expended in the company’s tax assessment.
Both business types consist of at least two partners. In the case of general partnership, all its members are liable for all the company’s debts with all their personal assets and not just with their share or the amount of the capital they invested on it.
As far as limited partnerships are concerned, this type of company consists of at least one limited and one general partner. The limited partner is only liable for the amount of investment in their company and they have no management responsibility. Conversely, the general partner (-s) is the one that can be responsible for the company’s management.
Private Company Private companies are a rather new type of business whose aim is to simplify and to overcome the bureaucratic obstacles that companies limited by shares (S.A./A.E.) and limited liability companies (E.P.E.) face. Therefore, private companies fill an important gap in the area of entrepreneurship. The minimum capital requirement for this company type is at least one euro. To put it simply, one or more people contribute (invest) their capital (money, property, or other kinds of assets) to a goal, an idea or an activity and await the output of their investment, namely their dividend. Private companies can also be controlled by a single partner (MIKE). It requires at least one administrator, who has to be one of its members, or a third party. Finally, the establishment of a private company can be done in a few hours and at a low cost.
This type of company combines the principles of partnership and limited liability. In other words, the participants are only liable for the amount of their investment in the company; however, they are obligated to pay for the company’s insurance contributions. This business type requires at least one shareholder and its startup capital can be as low as one euro.
Being the flagship of companies, the S.A. has a minimum capital requirement of 25,000 euro. In the context of the S.A., the shareholders are liable for the amount that they have invested in the company. The board of directors, which is elected by the general assembly, makes the managerial decisions.
The establishment and upkeep of the S.A. has a high cost, it requires several publications, and the legislation surrounding it calls for attention to detail.