One-person business or company?
Making the decision to exercise your activities as a self-employed worker or to form a company has consequences for the rest of your company's life. Each option has advantages and disadvantages.
Your final choice will depend on several criteria including:
- the activity planned,
- the number of people who will be involved,
- the organisation which will be in place,
- the capital outlay,
- financial commitments,
- the financial responsibility related to the activity,
- the fact that some companies are subject to more complex accounting requirements,
- the needs generated by the activity,
- the expected development of the business,
- the choice of the most appropriate taxation system.
In the majority of cases, when working with several parties and where financial commitment risks are significant, exercising the activity in the form of a company is required. A business in which many people are involved will require a structure that defines the duties of each person, the management procedures, an adequate legal framework, etc. The company will be created based on this structure.
If the company has to make significant financial commitments because it must acquire inventory, hire staff, and make investments, it may be faced with insurmountable financial difficulties. In this case, those exercising the activity as a natural person will be personally liable for these commitments based on their assets. The activity in the form of a company gives the company its own personality and creates, in the majority of cases, separation between the assets belonging to the shareholders and those belonging to the company.