Business Structures: Types, Features, and Formation
Legal Forms of Companies and Their Main Features
Sole Trader
A physical person regularly exercises, on behalf of themselves, by themselves or by proxy, a business activity. The following can be entrepreneurs: adults and emancipated minors, non-emancipated minors in certain circumstances, and those with free disposal of their property. There is no separation between the assets of the company and the employer. The liability is unlimited.
Community of Goods and Labor Society
An association of people who pool their assets to perform an activity. This association has a physical personality. Community sponsorship coincides with the partners. Liability is unlimited.
Limited Liability Company (LLC)
The partners contribute capital to meet only her debts. Liability is limited.
Features:
- It is a capital company.
- Capital is divided into shares that are equal, indivisible, and cumulative, with limited transmission that can be accumulated, in cash or in kind (the founding partners are liable if accepted), with limited transmission between the living.
- The company is governed by the will of its members, meeting in a general meeting.
- The representative is responsible to another corporate body, which can be a board of directors, a sole director, or two or more administrators, who act jointly (other administrators need permission).
- Statutes are included in the data organization and management of the company (name, address, capital).
- The constitution can be made by deed or by-laws (commercial register BORM).
After the name should be the indication of a Limited Liability Company, LLC, or Limited Partnership, SL. Legal limitations are that social capital cannot be less than €3,000 and has to be paid in full, with at least one partner. It includes the new company limited company as a form of limited partnership where they have easier, simplified, and shortened procedures for its establishment and subsequent management.
Differences:
- The name of the company is formed with the name of one of the founding members plus an alphanumeric code, to which must be added the indication of a Limited Partnership or SLNE (New Company).
- Reduced and simplified formalities and documents, and their implementation telematics.
- Up to a capital of €120,202 and a maximum of five members.
Société Anonyme (SA) or Corporation
Members are called shareholders, and provide capital and meet the debts only to the amount of their contribution. Liability is limited.
Characteristics:
- It is a capital company, where the partner has no right to manage the company.
- The capital is divided into parts called shares.
- Social capital can be disbursed by the shareholders at the time of its formation, with a minimum of 25% and the rest on schedule.
- Membership can be anonymous.
- The actions of the partners have value in themselves, incorporating rights in society.
- The company is governed by the will of its shareholders gathered at a general meeting of shareholders.
- The management and representation of what society does is either a board of directors, a sole director, or two or more administrators, who act jointly (other administrators need permission).
- Statutes are included in the data organization and management of the company (name, address, capital).
After the name should be the indication of a corporation, or limited SA. Legal limitations are that the capital cannot be less than €60,000, fully subscribed, and the partners have to pay a minimum of €35 at the time of incorporation.
Both corporations and limited partnerships can be formed by a single partner or be in this situation. In these cases, this situation must be included in the commercial register and marked on all your documents as a one-man status. The name of the society will have to add the indication of “one-person” at the end of the name.
Labor Society
A form of corporation or limited liability company in which workers are members of the company. There may be members who are not workers, provided that a majority of the capital belongs to the worker-members whose employment with the company is indefinite.
Features:
- A society of capital, since this is divided into registered shares (limited company) or shares (limited company).
- The members have limited financial liability to the amount of their contribution.
- The society is governed by the will of its shareholders in a general meeting assembled.
- The management and representation of what society does is either a board of directors, a sole director, or two or more administrators, who act jointly (other administrators need permission).
- If you have a board of directors and there were two types of partners, both classes must be represented on this body in proportion to their contributions.
- Statutes are included in the data organization and management of the company (name, address, capital, number of shares). These, with legal norms, govern the life of society.
After the name of society, should be added as appropriate, an indication of work or SAL corporation, or limited liability partnership working SLL.
Legal limitations are those set out for corporations or limited liability companies, as its shape, plus the following:
- Minimum number of partners: 3.
- No member may hold shares or shares representing more than a third of the capital.
- The capital must be held mainly by contract workers indefinitely, at least 50.01%.
- The number of hours per year of indefinite workers who are not members cannot exceed 15% of those undertaken by the working partners, and 25% in companies with fewer than 25 worker-members.
- The law limits the number of workers indefinitely fees.
- In addition to the appropriate legal reserves, labor companies are required to set up a special reserve fund to be carrying a 10% of net profits each year.
- You can only use it to offset losses if the company has no other reserves.
- Bonus of 99% Tax Procedures (ITP) and Documentary Stamp Duty (AJD) and the tax exemption on contributions from corporate operations and increased capital formation.
Cooperative Society
A non-commercial entity that does not seek profit but the common needs of its members. Community is a way that involves the maximum integration between property and labor. From this point of view, it is the worker cooperative that may have some significance as a business organization.
Features:
- The cooperative provides the capital and does the job.
- Your liability can be freely set by the partners, reflected in the statutes.
- In the name of the company to be included are the words “cooperative society” or “S. Coop”, never at the beginning of the name.
- The capital consists of contributions of the cooperative, as reflected in the registered securities, which may be disbursed to at least 25% constituted.
- The statutes set out the internal organization and modules to share the result of economic management.
- It is governed by the general assembly, with the governing body and management of the governing council, although there may be a director responsible for matters relating to the business.
Legal limitations are that the minimum number of partners is 3, and cannot hire workers from outside the cooperative partners of more than 10%.
Each autonomous community has its own laws. In Madrid, the capital minimum is €1,803, and no partner may have more than 45% of the capital.
Establishment Procedures and Requirements
The promoters must make a series of steps in various public bodies in different territorial areas, which are classified as local and provincial, city councils, and county councils. Autonomy: government boards, councils of the regions. State ministries, national institutions. Community: EU agency.
Another way to obtain this information is in one-stop business and Information Centers or European Information Centers.
Specific Procedures for Companies
- Certification Negative Name: This is the first step. No person may adopt a name identical to another existing company. It is necessary to request the certificate name mismatch.
- Memorandum and its execution: Then there will be to develop the charter, in the lime must express significant data such as company name, brand promoters, company capital, contributions each partner, statutes, and the names of the administrators and representatives. The articles of incorporation and the adoption of statutes by the partners must be made before a notary, bringing those writing pubis. Then to be inscribed in the commercial register.
- Ask for the Provisional Tax (model 030). Settlement of excise tax and legal acts Documentary (model 600): The company, for registration in the commercial register, must repay the amount for the tax (ITP and AJD), which is levied on corporate transactions, particularly those established commercial companies. It is 1% of the capital, but the mini-companies are exempt.
- Registration in the Registry: What does the notary. Will in the locality where the seat of the company. Its purpose is to publicize the legal and business situations so they can be known by the persons concerned is published in the BORM, and micro-enterprises are exempt. The companies have no legal status until they are entered in the Register.
Other General Procedures for All Enterprises
- The Census Declaration: This is a process used to inform the tax authorities of the beginning of business activity and indicate the VAT and income tax schemes chosen. It also requested the tax identification number of the FRS companies. This procedure is done using the official form of tax return at the tax office, tax office, or agency of regional finances. This form also serves to inform the Inland Revenue of the company data for the purposes of IAE Business Tax (model 840); they are exempt from paying the same if the individual entrepreneur and start-up (first 2 years of his activity).
- Opening License Application: It is intended to approve the use of the premises and facilities after verifying that they are finished and ready. Requested in each local municipality where the company is established. Innocuous activities or qualified.
- The Property Tax: The IBI is a direct tax, and compulsory acquisition involves real estate, whose tax management corresponds to the municipalities. It is a periodic tax, which is calculated by applying a percentage to the assessed value of property owned.
- You must inform the employer registration and account opening quotation (TA6).
Economic and Social Benefits for Start-ups
These support measures are variable depending on economic times and different geographical areas.
Tax Incentives
It aims to eliminate or reduce some tax burden borne by enterprises, using various tools such as reductions in tax rates, reductions in tax bases, lower fees to settle, tax on certain investments and expenses, et al.
Grants and Subsidies
Basically consist of:
- Repayable grants (government grants).
- Partial subsidy, improved borrowing conditions, reductions in assessments of the SS rural employment.
- Grants and other innovative projects.
To apply for both types of company must be presented in different administrations appropriate documentation showing compliance by the companies that qualify. Sometimes there are usually clauses of incompatibility between some aid.
Company Name
The name or corporate name of the company can choose: for its meaning because it is striking for its ability to identify business, as the name of the individual who owns the company because it is a word well known and accepted socially.
Logos and Anagrams
They are symbols designed to identify a particular company. These symbols must be simple, easy to remember, and associate with the company. They are to be recorded in the Register of Industrial Property, which often have an initial cost and subsequent payments.