Have a dream to turn your business into a big company? If so, then you need to consider establishing the type of business entity for your business from the start. The choice of the type of business entity itself, whether it is a Limited Liability Company (PT), Commanditaire Vennootschap (CV), firm, or others, is closely related to other business aspects such as employment, taxes, participation in a tender, and applying for capital to the bank. Therefore, it is best not to rush in choosing the type of business entity and KH Buddy must first know what are the advantages and disadvantages of each type of business entity. Then, how to choose the right type of business entity for your business? What are the things that need to be considered? Here is the explanation.
Types of business entities in Indonesia, which one do you choose?
Before choosing the type of business you want to establish, you first need to know what types of business entities exist today. In Indonesia, there are several types of business entities as follows:
Limited Liability Company (PT)
A PT is a business entity as well as a legal entity. In a PT, there are shareholders which means shareholders and also stakeholders. As a PT, capital and capital loans are very easy to obtain. Shares are also easily traded with very professional management. The company’s assets are separate from personal assets so that there is a guarantee of the welfare of the company’s employees.
Limited liability partnership (CV)
CV is a business entity formed by a cooperation agreement in establishing a business between a person who is willing to manage and be fully responsible with his personal wealth, and a person who only provides capital but is not willing to lead the company. CVs are usually favored by businessmen with limited capital because of the ease of obtaining credit and the security of the business.
PT Individual
An Individual PT is a business that is owned by only one person, thus all activities and responsibilities and risks will be borne by the owner alone. The advantages of establishing an Individual PT are that it is easy to supervise, is not subject to tax, has lower management costs, profits belong entirely to the company, has a relatively simple legal administration process, and loss compensation can be included as a tax calculation.
Cooperative
Cooperatives are associations of people who have the aim of cooperating and accommodating economic activities at the lower level. This business entity prioritizes members and aims to improve the welfare of fellow members. Each member has equal voting rights, no one is more dominant.
Foundation
A foundation is a legal entity with separate assets, where most of its purposes are not for profit or profit, but for social purposes. Establishing a foundation must be based on the desire not to seek profit, so if Friend KH aims to enrich himself, then the foundation is not a suitable business entity to be created.
What are the things to consider when choosing a business entity type?
Now that you know what types of business entities exist and the characteristics of each business entity, you only need to consider other things including the following:
Authority and Responsibility of Business Entity Owners
Each business entity has certain characteristics in terms of decision-making and limits of authority in running the business. In addition, not all types of business entities have a separation of responsibilities between the owner and the company. For example, CV, then KH Friend as the owner must be ready to risk personal property in the event of a loss because it is the full responsibility of the owner. It is different if your type of business entity is a PT, where the responsibility is only limited to the capital deposited.
Financial Capability and Ease of Establishment
Capital is usually a consideration in choosing the type of business entity. Businessmen with limited capital usually prefer the establishment of a business entity that is not costly and the process is simple. If KH Friend currently has a small capital, then you can choose to establish a CV whose cost and establishment process is easier and simpler than PT.
Ease of Capital Acquisition
A business is certainly not far from the need to obtain capital loans, whatever form it takes. This capital loan will ultimately determine how much the company can grow. In addition, when creating a business entity, it is expected to create an account in the name of the company so that the bookkeeping will be tidier. For capital purposes, it will be easy to apply to banks or investors if cash flow is good and financial records are good.
Business Development
A businessman must be a visionary. Therefore, optimism in developing a business is also something that must be considered in choosing the type of business entity. Moreover, as the business grows, not only the turnover is getting bigger, but the risks are also getting bigger. Therefore, it is necessary to adjust and prepare a strategy to choose the right type of business entity. If your finances are not sufficient to establish a PT, you can start with a CV first, then if it grows, you can establish a PT.
Legislative Obligations
In certain cases, business owners cannot choose the type of business entity because there are regulations that limit them. For example, hospitals or banks are stipulated to be incorporated as PT and are not allowed to choose other types of business entities. This determination is also reinforced by a binding law or regulation.
ALSO READ: Why is it Better to Choose PT Business Form?
Those are the five things that need to be considered before choosing the type of business entity. By considering some of the factors above, it is hoped that the chosen business entity will truly match the expectations and goals of the business.
KH Contact
With a business entity, a company will have legality in carrying out its business activities. A business entity can also protect the company from all demands for legal risks while carrying out its activities. Not only that, a company with a business entity will clearly make it easier for other parties to establish cooperation. Well, for KH Pals who also want to establish a business entity for your business, you can just leave it to Kontrak Hukum. We provide the most complete, affordable, and fastest business entity establishment services, ranging from PT, CV, individual PT, cooperative, to foundation. For more information about each business entity that suits your business needs, you can visit this page. If you have questions about business entities and other legal services, please contact us at Tanya KH, or send a Direct Message (DM) to Kontrak Hukum’s Instagram social media account @kontrakhukum.
