Legal Business Structures and Trader Obligations

Legal Business Organization

A company is a set of tangible and intangible assets whose primary objective is to achieve an economic objective.

The legal system, in regulating business, offers two main options:

Single Enterprise vs. Joint Venture

Single Enterprise

Refers to an individual who develops a business. In this case, the employer is often confused with the company.

Joint Venture

Consists of a fictitious person composed of natural persons, possessing legal personality and its own patrimony. This category includes different types of companies covered by law, such as limited liability companies, partnerships, and public limited companies (SA). Currently, there is also the Individual Limited Liability Company.

Defining the Sole Trader

When we discuss the individual entrepreneur or sole trader, we are simply referring to traders.

Traders are those who have the capacity to contract and make trade their usual occupation.

From this definition, three requirements are necessary to be considered a trader:

Requirements for a Trader

Capacity to Contract

This is the legal capacity of a person to acquire rights and exercise them.

Engaging in Commerce

This means that anyone wishing to be considered a trader must necessarily perform acts of commerce.

Making Trade a Usual Occupation

This means that for a given person to have the status of trader, they are required to perform commercial acts repeatedly. The Commercial Code does not specify a fixed time period to determine this repetition. The court that hears each case will determine what constitutes habitual activity.

Obligations of Traders

Four obligations are expected of a trader:

Carrying Accounts

This obligation is established in Article 25 of the Commercial Code. The objective is to provide a comprehensive and accurate status of a taxpayer's assets to those wishing to contract with them.

A trader conducts various commercial businesses daily. In many cases, it is necessary to display the trader's asset status, which is why they must keep accounts.

There are two categories of accounting books:

• Mandatory: Those which any merchant must necessarily keep (general ledger, journal, balance book).
• Optional: Those that the trader is free to keep or not (cash book, bank book, book of obligations payable).

Recording Documents in Register of Commerce

This obligation is established in Article 20 of the Commercial Code. It states that in each provincial capital, there shall be a register of commerce kept by a person named the Registrar of Commerce.

Enrolling in a Special Register

During the term of Law No. 17,066, now repealed, there was an obligation for every marketer to enroll in a register called the National Register of Merchants, Artisans, and Small Industries.

Paying Municipal Patent

The municipal revenue law indicates that the exercise of any profession, trade, or industry in general, or any gainful activity, whatever its nature or denomination, shall be subject to the payment of a specific municipal patent.