What type of company do you want to have?
Posted on 02/06/2020
If you are entering the business world, the first thing you must define is what type of company you are going to establish. You should know that there are several classes and their classification depends on factors such as the number of people, the distribution of capital, the responsibilities and the objective of the companies, among others.
According to the Bogota Chamber of Commerce (CCB) and Colombian legislation for the exercise of economic activities, these are the main legal forms under which a company can be created:
There are three options in which you can carry out business activities:
Natural person: Article 10 of the Commercial Code defines a natural merchant person as "a person who professionally engages in any of the activities that the law considers commercial".
In this case, the natural person responds with all his assets (personal and family) for the obligations that he acquires developing his economic activity.
To establish your company as a natural person you will need: to register in the Single Tax Registry (RUT) administered by the Dian. Then, make the Commercial Registry before the Chamber of Commerce of the corresponding city or municipality.
You will continue to identify yourself as a natural person and will have a NIT (corresponding to your ID number plus an additional digit).
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Sole proprietorship: "it is a legal person made up of a natural or legal person that allocates part of its assets to carry out one or more business activities," says the CCB. In this case, the employer is unlimitedly liable for his obligations.
This type of company must be created by means of a document that includes: name, identity document and address of the entrepreneur, the company name, followed by the expression ‘Unipersonal Company’ or its EU acronym and the company address. Finally, the term of duration if it is not indefinite.
In addition, you will need to include a complete description of the company's activities, the capital it has and the powers of its administrators. "Additionally, the constitution must be made by public deed, when assets whose transfer requires this formality are contributed," says the CCB.
Sole shareholder in a simplified joint stock company SAS: this company can be constituted by one or more people, through a private document.
The document includes: name, identification and address of the shareholder or shareholders, company name followed by the words: Simplified Stock Company or SAS, duration (may be indefinite), listing of activities, authorized capital, subscribed and paid, form of administration and the names and identifications of the administrators.
Like the sole proprietorship, it must be established by public deed when assets are provided whose transfer requires this formality.
From two or more people
If you decided to do business with one or more other people, keep in mind that you will form a commercial company in which “a legal entity that is constituted by a company contract by virtue, in which two or more people are obliged to make a contribution in money, work or other goods that are worth money, in order to share the profits obtained, ”says the CCB.
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You can choose between the following personal, capitalist or mixed companies.
Personal: in which the partners know each other and respond with their assets in a solidary and unlimited way, such as partnerships or in a simple limited partnership.
Capitalists: here it is not known who the partners are and they are liable up to the amount of their contributions for social obligations, for example, joint stock companies, limited partnerships or simplified joint stock companies.
Mixed: in these the partners know each other, but only respond for the obligations acquired by the company up to the amount of their contributions, for example: limited companies.
Requirements to incorporate companies
Collective society: it is constituted by public deed and has neither a minimum nor a maximum allowed for the capital of the company.
"It is important to know that the corporate name of these companies is formed with the full name or only the last name of one of the partners, followed by the words: 'and company', 'brothers' or 'and children.' This means that a name of a stranger cannot be in the company name, ”explains the CCB.
Simple limited partnership: is created by public deed between one or more managing partners and one or more limited partners or capitalists.
In this case, the managing partners respond jointly, unlimitedly and directly for the operations, and the capitalist partners only answer for their respective contributions.
It is important to know that managing partners are in charge of administering or delegating the administration to third parties, something that limited partners cannot do.
“The name of these companies is formed exclusively with the full name or only the last name of one or more limited partners or managers; followed by the words ‘and company’ or its abbreviation ‘& Co.’ and followed by the abbreviation ‘S. in C. ’”.
Public limited company: it is constituted by public deed between at least five shareholders, who are liable for up to the respective amount or capital contribution that they have provided for the company.
The administration of this company is carried out with the general assembly of shareholders who define the statutory auditor and the board of directors, who in turn defines the manager, who assumes the legal representation of the company.
Capital is represented in shares of equal value. Its corporate name will be the name defined by its shareholders followed by the words: ‘Sociedad Anónima’ or its abbreviation ‘S. TO.'
Limited partnership by shares: it is created by public deed between one or more managing partners and at least five capitalist or limited partners.
The managing partners respond jointly, unlimitedly and directly for the operations, while the capital partners only respond for their respective contributions
The corporate name of these companies is formed exclusively with the full name or only the last name of one or more partners, followed by the words: 'and company' or its abbreviation '& Company' followed in any case by the words: 'Company in Limited by Shares' or its abbreviation 'SCA'.
Limited company: born by public deed between a minimum of two partners and a maximum of 25, who respond with their respective contributions.
Members may delegate legal representation and administration to a manager, who will be guided by the functions established in the statutes.
Capital is represented in shares of equal value so that they can be sold or transferred under the conditions provided by law or in the respective statutes.
Whatever the name of the company must be followed by the word "Limited" or its abbreviation Ltda. Which, if not clarified in the statutes, will hold the associates jointly and unlimitedly liable.
Other types of companies:
There are also other companies such as the Associative Labor Company (EAT), Agrarian Transformation Societies (SAT), cooperatives, among others.
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