Starting a business: how to choose the legal form of your company?

Published on : 15 November 20213 min reading time
When setting up a business, it is essential to choose a legal form. The latter allows the company to operate legally. This choice must be made according to the type of business project and certain other criteria that we are mentioned below…

In order to know which legal form to choose for your newly created business, it is necessary to have sufficient knowledge. The intention is to understand the different legal forms as well as the functioning of each one of them. Before deciding on the legal form your business will take, you should be aware that each type of status has its own characteristics. All in all, there are two main structures to choose from: the sole proprietorship and the company. More specifically, the choice should be made between the auto-enterprise, the simplified joint-stock company, the individual business with limited liability and the limited liability company.

Take into account the number of founders and co-founders

It is also advisable to take into account the number of founders when choosing the legal form of a company. This allows you to size your project and refine your choice of legal status. For example, if you are a sole trader, you can go for the legal status of the same name. It is also possible to set up a one-person company. However, if you are planning to set up a business with several other entrepreneurs, you should go for the company status. More specifically, the creators of a commercial company should choose a limited liability or a simplified joint-stock company status. The liberal professions, on the other hand, usually go for the civil company status, but the choice varies according to the profession’s nature.

Whether or not you have personal assets to protect comes into play

To determine the legal status of your company, you must take account of your personal assets. There is a big difference between a sole proprietorship and a company in terms of the nature of each status’ assets. A sole proprietorship’s assets overlap with those of its manager. The opposite is true of a company. It should be noted that certain legal forms allow the manager’s assets to be protected. These are the limited liability company, the individual business with limited liability, the simplified joint-stock company, the limited company and the simplified joint-stock company status. So, if this is your case, you should absolutely go for one of these legal forms.

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