Business Creation and Implementation Guide
ITEM 12: Business Creation and Implementation
Self-Employment and Employers
Self-Employment: Individuals working independently, without direct reliance on other workers.
Employer: Entities, including individuals or legal persons (public or private), that hire employees to produce goods or provide services.
1. Self-Employment
Reasons for starting a business include personal benefits, following family traditions, and identifying business opportunities.
Production units (firms) require factors of production (natural resources, capital, labor) to produce goods or services. Utilizing these factors, companies reward owners and utilize existing goods (means of production). This defines the enterprise system and determines the elements for creating and implementing a production unit. Whether individually or as a group, business success depends on the commercial and technical viability of the idea.
1.1 Employer Concept
A natural or legal person, public or private, that recruits staff for service provision. Work by employers or the self-employed is generally not subject to labor law, except where specifically mandated by statute.
1.2 Business Types
Choosing the right legal form requires considering the characteristics that differentiate them:
Features to Consider:
- Company ownership (public or private)
- Capital formation requirements
- Number of members
- Responsibility for risks
- Legal rules regarding tax and accounting
1.3 Legal Forms of Enterprises
Sole Proprietorship: Simplest form with minimal formalities. Suitable for low volume and very small businesses. The main drawback is high tax rates on significant profits. It has a physical personality, a single owner, is taxed under income tax, requires no initial capital, and has unlimited liability.
Community Property: Requires a private contract detailing contributions and participation percentages. It has a physical personality, requires at least two partners, is taxed under income tax, needs no initial capital, and has unlimited liability.
Civil Society: May or may not have legal personality depending on agreements. Two types of partners: capital partners and industrial partners. It has a physical personality, requires at least two partners, is taxed under income tax, needs no initial capital, and has unlimited liability.
General Partnership: The partnership is liable for debts with its assets, and partners are jointly and severally liable. If only one partner provides capital, they are a silent partner. If a partner only provides labor, they are an industrial partner. It has a legal personality, requires at least two partners, is taxed under corporate tax, needs no initial capital, and has unlimited liability.
Limited Liability Company (LLC): Allows profit-sharing and distribution of assets upon liquidation. Dividends are distributed based on contributions. It has a legal personality, requires at least one partner, is taxed under corporate tax, has a minimum capital of EUR 3,005.06, and has limited liability to the capital contributed.
Joint-Stock Company (SA): The capital is divided into shares. Requires at least one partner responsible for corporate administration (general partner). Limited partners have no such responsibility. Requires a public deed and registration. It has a legal personality, requires at least one partner, is taxed under corporate tax, has a minimum capital of EUR 60,101.21, and liability is limited to the capital contribution.
Limited Partnership by Shares: Capital is divided into shares. At least one partner (general partner) is responsible for corporate administration. Limited partners have no such responsibility. Requires a public deed and registration. It has a legal personality, requires at least one partner, is taxed under corporate tax, has a minimum capital of EUR 60,101.21, and this capital is in shares.
1.4 Incorporation Procedures
Establishing and implementing a company requires administrative procedures for legalization and registration. These include:
- Municipal Licensing
- Registration
- Bookkeeping Procedures
- Employment and Tax Procedures
2. The Business Project
The business project assesses all aspects that drive business start-up and determines the approach to financial institutions, agencies, and potential partners.
2.1 The Business Idea and Market
Choosing the product or service offered defines the business idea, the foundation of the business plan. Understanding existing market opportunities and technical expertise is crucial for implementation. The business idea must be realistic, technically and economically viable, and implemented with acquired knowledge. Consider your knowledge and the target market when choosing the business idea.
2.3 Business Plan Content
The business plan defines the elements, factors, and criteria for each area of the company. It should include at least:
- Objectives and Description: Describes the business promoters, the idea’s realization, the project’s general characteristics, a summary of actions, available resources, and expected outcomes.
- Marketing Plan: Defines the target audience, pricing strategy, and other marketing aspects. Market analysis, information assessment, and situational analysis reveal the company’s strengths and weaknesses, as well as existing threats and opportunities.
- Production Plan: Outlines the organization of the production process, including material supply, storage, and technology utilization.
- Human Resources: Addresses job creation, including the number of employees needed, their roles and responsibilities, contract types, and applicable labor laws.
- Financial Business Plan: Evaluates investment and financing needs, including available resources, fixed assets, and working capital requirements.
- Legal Form and Procedures: Defines the company type and necessary legal procedures, such as obtaining an identification number.