Types of Business Entities and Legal Obligations

Lecture 3: The Individual Businessperson

People: natural person who carries out a business activity in their own name and account. - Finances activity with personal funds or borrowing. - Capacity: must be of age and free to dispose of assets. - Particular Presumption: if a minor or incapacitated, representation is needed. Management: - Simple start-up process: no legal process required. - Investment: capital limits set by the entrepreneur. - Total control: bears all costs, management duties, investments. Disadvantages for individual businesses: 1. Taxing: pay more if profits are higher. 2. Liability for Debts: debtor is liable with all present and future assets. 3. Assets Subject to liability of the businessperson. 4. Economic Marriage Settlement: agreement dividing assets on marriage. A) Community of joint assets: acquired or earned. B) Separation of assets or participation in earnings: exclusive and common assets must be registered. Collective business: group pursuing a business activity. Legal Entity: Private and public. Private: Partnership: agreement for profit. Public: Associations: group with common aims. Corporations: benefits for public institutions. Civil Partnership: private agreement for profit. Joint ownership: co-owners set rules for commonly owned goods. General partnership: contract between 2 or more partners. Simple limited partnership: formed under code of commerce. Basic characteristics of a company: capital from members, separated personality, registration, mercantile societies, boards, minimum capital requirements. Businessperson statute: obligations to register and keep accounting records. Mercantile Register: public publication of company data for legal security. Organized into central and territorial registers. Formal accounts: obligatory and optional books for companies.