What is a partnership?
Before knowing the types of societies that exist, we must start by defining what a society is. Well, a partnership refers especially to a contract that can be initiated by one person or more, who join together with the intention of starting a business. The intention of such a contract is to give legal power to the founders, which is different from the partners who will invest in the partnership.
This is how the project is legalized and can contain its own patrimony, which is formed from the contributions provided by the owners and partners individually who are part of the society.
Characteristics of a society
One of the main virtues of a partnership is that the legal entity, as we mentioned, is different from the partners. This implies that this person has a name or business name, as well as a different routine. The corporation allows the protection of the personal assets of each of the partners, since it contains its own assets. This own capital is formed by the capital of the partners, which can be made from money, work or goods, which are put in expert valuation.
Types of companies – Which ones exist?
There is a great variety of corporate entities, which are classified in the types of companies that we will see below, where each one of them works in a particular way with legal implications that may vary. Here we can see more information about types of companies
Capital company: they are also known as open companies, they are characterized by the fact that they are regulated by the Commercial Law. They are autonomous in terms of assets, so that they respond to the obligations of the company with an estimated limit. The share capital is managed from the company itself and its needs, in which we find both corporations and limited liability companies.
Public limited company: this type of company refers to the one where a public offer of the shares is made, it must be registered with the National Securities Registry. It has an unlimited number of partners and its liability is limited to the amount of the corresponding shares. The partners are part of the company with a share of the capital from their contributions.
Limited company: also known as a limited liability company, it refers to a type of company that can be formed by one person. It is easier to incorporate. In the event that a debt is incurred by the company, the obligation is not covered by the personal assets of those who are part of the group of partners.
General partnership: in this partnership, the partners have unlimited liability for the debts acquired by the partnership with the personal assets. It is constituted through a much faster process than other companies. It does not have a defined number of partners, so participation is unlimited. The contributions can be made in money or goods. The entrance of new partners implies the approval of all the established partners.
Sole proprietorship: this is one of the simplest alternatives for starting a business activity on an individual basis. Thus, this type of society allows the self-employed to consolidate their business with a legal name, where they make the decisions that concern their activity and are responsible for what happens there.
De facto company: this type of company is not constituted on the basis of a public deed, since there is no legal entity. The company is created by the will of two or more people who start the activity with joint and commercial purposes. The obligations and rights are acquired by the company and are also acquired by the partners who are part of it.
Civil society: under this modality, two or more persons start a commercial activity regulated by the Civil Code, instead of the Commercial Code. No minimum capital is required for incorporation. It does not require a public deed, it will be enough for the contribution of goods or real rights.
Sociedad en Comandita (Limited Partnership): this is where the limited partners are present, who contribute the share capital of the partnership and manage it. In order to be constituted, at least two partners are required, the responsibility of the partners
is of limited character. However, when the limited partners are present, one of them is personally liable for corporate debts acquired within the partnership.
Workforce owned company: in this type of company, the liability of the shareholders is limited to the capital held by each one of them. It is governed by a series of much more complex corporate bodies. Most of the share capital is in the hands of the workers, who will be people who provide their services, and it requires at least three partners to set up the company.
Company by shares: it is characterized by the ease with which it can be legally constituted, since it gives shareholders the power to voluntarily regulate all aspects of the company, its decisions and management processes. Its purpose is to engage in commercial activities. Only one person can incorporate this type of company.
Foreign society: and finally, we find this type of society, which is directed to groups or agencies that plan to carry out commercial activities in a foreign national territory. In this way, the legal entity must abide by the Commercial Code of the country where it is to be established, as well as by its set of rules and regulations for companies.
Advantages of opening a company
Among the set of advantages that we can emphasize at the time of constituting a society, is mainly the possibility of acquiring legal status, which will facilitate several commercial activities, such as: access to new customers, to insurance and social benefits, to be able to have access to financial credits, protection for personal and partners’ assets and to be able to expand products or services at international level.
On the other hand, the responsibility of the partners that are part of the company is limited, it is possible to build family patrimonies, there is a greater access to possible investors and in fact, a professional image of the company is built.
Disadvantages of opening a partnership
However, in order to have access to this set of powers, it is necessary to go through not so simple and rewarding processes. Among the disadvantages we must consider the payment of taxes as a constituted company, the amount of documents and procedures that must be carried out, the non guarantee of liability protection and the declarations before the corresponding entities.
In many cases, the investment capital has an established minimum, although this does not happen in all cases.
Now that you know all this information, you are much better prepared to continue setting up your own company. Click on each of the links for detailed information on each type of company.
Consult with an expert before starting and start building your own business project step by step.