Entrepreneurship or limited liability company?

If you have made the decision to start your own business, the question in which legal form you will register your business is crucial, because it affects many aspects of the business – representation of the business entity, responsibility for obligations arising in business, etc.

In practice, business entities are most often registered in the form of entrepreneurs or in the form of a limited liability company, and in this text we will point out the specifics of these forms, but also the advantages and disadvantages that they may have.

 

ENTREPRENEUR

Entrepreneur shall be any fully capable legal person registered in accordance with the Law on Registration with the Business Registers Agency, as well as any other person practicing freelance who is treated as an entrepreneur on the basis of certain special regulations.

An entrepreneur can carry out absolutely any activity that is permitted by law, including old and artistic crafts and domestic crafts.

An entrepreneur may entrust the management on the basis of a written authorization to the manager (who can become any able-bodied natural person), provided that the person is employed by the entrepreneur, which must be registered with the Business Registers Agency. However, exceptionally, in the case of some justifiable reasons (illness, education, etc.), an entrepreneur may temporarily authorize a member of his household without the obligation to employ him.

The main characteristic of entrepreneurship, but also a disadvantage, is the fact that for all obligations arising in the course of business, the ENTREPRENEUR IS RESPONSIBLE WITH HIS OWN PROPERTY (therefore, in the case that you are an entrepreneur and owe, for example, money to a supplier of goods, the creditor could collect the debt from your personal property.

The entrepreneur may at any time make a decision on the continuation of business activities in the form of a company. In this case, the company that was created by the said decision assumes all the rights and obligations of the entrepreneurs that have arisen in its previous business. However, even though the entrepreneur ceased to exist in this way, the natural person who lost the entrepreneur’s capacity is still liable for all his / her property for all obligations incurred up to the moment of deletion of the entrepreneur from the register of entrepreneurs at the Agency for Business Registers.

 

A LIMITED LIABILITY COMPANY

The most common legal form in which business entities are established is a limited liability company.

The name itself reveals the greatest advantage of the aforementioned form – for the obligations incurred in business, the members of the company DO NOT RESPOND WITH THEIR PERSONAL PROPERTY, BUT EXCLUSIVELY TO THE COMPANY PROPERTY.

To start a company like this, the first step is to adopt a founding act.

If a company has one member, the founding act is made in the form of a decision on incorporation, and when it comes to a multi-member company, in the form of a founding agreement, signed by the members. However, once established, new members may join the company at any time.

Each member has a share in the company commensurate with the value of its role in the total share capital of the company. On the basis of the share, a member of the company acquires rights such as the right to vote in the assembly of the company, the right to participate in the profit of the company, etc.

As we have mentioned the Assembly, it is important for you to know that the basic ways of managing a company are one-sided and two-sided. Thus, in the case of unicameral management, the bodies of the company are the assembly and one or more directors, while in the case of bicameral management the bodies of the company are: the assembly, the supervisory board and one or more directors. However, in a one-member society, the function of the assembly is exercised by the sole member of the society.

The company is represented in its day-to-day business by a legal representative-director who may not be a member of the company.

Finally, to set up a limited liability company, the minimum share capital of the company  in Republic of Serbia is 100 dinars.

If you intend to start your business in any of the legal forms mentioned above on the territory of Republic of Serbia, commercial law attorneys can assist you with this through https://bozoviclegal.com/kontakt/.

 

Katarina S. Bozovic, attorney at law