• Fri. May 27th, 2022

How to Choose the Type of Company for Business


Oct 29, 2020
How to Choose the Type of Company for Business

Have a dream to turn your business into a big company? If so, then you should consider setting up a business entity for your business from the start. The selection of an individual business entity, whether it be a Limited Liability Company (PT), CV (Commanditaire Vennootschap), Frima or others, is closely related to other business aspects such as employment, taxes, participation in a tender, and submitting capital to a bank.

With a business entity, a company will have legality in running its business. Business entities can also protect the company from all claims or consequences during its activities. Not only that, companies that are legal entities will clearly provide facilities for other parties to establish cooperation.

How to choose the right type of company for your business? It’s not easy. But you can definitely do it.Here are some of the main factors that you need to consider in determining the type of company or legal entity that is suitable for your business.

1. Limits of responsibility and authority of the owner

Every business entity has certain characteristics in terms of decision making and limits of authority in running a business. And, not all types of businesses have a separation of responsibilities between the owner and the company.

When choosing a Firma or CV, you as the owner must be ready to risk your personal assets if a loss occurs because it is the full responsibility of the owner. It’s different if your company type is a Limited Liability Company (PT). Your responsibility is limited to the paid-up capital.

2. Financial Capability and Ease of Establishment

Capital is usually a person’s main consideration in choosing a type of company. Businessmen with limited capital usually prefer to start a business that is not expensive and the process is simple. You can choose to set up a CV which costs less if the buget to establish a PT is not sufficient.

3. Ease of Getting Capital

In running a business, it is important to separate personal finances from business so they don’t get mixed up. This is closely related to capital requirements. With a selected business entity, you can create an account in the name of the company and apply for capital loans from banks or investors on behalf of the company.

4. Business Development

Along with the development of the business, not only does the turnover increase but also comes with greater risks. Therefore, business people who have a vision to develop their business need to consider choosing the right business entity for their business.

In addition to protecting your business activities, your company, which is a legal entity, will provide opportunities for other parties to work together easily.

5. Obligations of the Law

In certain cases, business owners cannot choose the type of business entity because there are regulations that limit it. For example, a hospital or bank that is stipulated must be a PT in its establishment and is not allowed to choose another type of business entity. This determination is also strengthened by the existence of binding laws or regulations.

It’s not easy to determine the right type of company or business entity for your business. However, if you consider the five factors above carefully, it is hoped that the business entity you choose will actually be in line with your expectations.

It is important to remember that your growing business will need a platform or business entity that is also able to accommodate the company’s mission and vision in the long term.

Happy running your business and good luck with you.