What type of company to choose?
LLC or Sole Proprietorship?

Don't know what to choose for your business to get results?
In the following article we'll try to determine which type of company is right for you, depending on your needs and desires. Thus, below we discuss what each term essentially represents, as well as the respective advantages and disadvantages of each.

A Sole Proprietorship or Individual Enterprise is a company owned by private citizens or members of their families and held in co-ownership. The inheritance of a Sole Proprietorship is formed based on the property of citizens or families and other sources stipulated by law. Any sole proprietorship has an inheritance that is inseparable from the personal inheritance of the entrepreneur.

The entrepreneur and owner of a Sole Proprietorship has unlimited liability for all their assets, except for properties that cannot be sued under the law.

Additionally, family members who own the sole proprietorship are jointly and severally liable for their obligations with all their inheritance rights, except for assets that have not been identified according to the law. In this sense, a Sole Proprietorship has the following
advantages:

• You have the possibility to found any company simply and easily.
• It's a simple way to keep accounting records.
• The cost of accounting services is minimized.

Disadvantages:

• Unlimited liability towards third parties.
  This means that in case of bankruptcy, creditors can claim personal assets (house, car) and spouse's personal assets, but only in cases where there is a community property regime.

A limited liability company or LLC is a commercial company with legal personality, whose share capital is divided into quotas according to commercial company laws, and whose obligations are guaranteed by the company's assets.

An LLC can be established by one person or by several. They agree to share certain goods or monetary means to conduct entrepreneurial activities and obtain benefits.
Partners of an LLC are not liable for the obligations that arise, but only assume the risk of their activities within the limit of their quota.

Thus, all obligations of an LLC are paid only by that LLC's assets. However, within the LLC, the company is liable only for its own assets, and employees are liable only up to the amount of their contribution to the share capital.

Opening a company as an LLC has the following
advantages:

• You have many opportunities to attract foreign investors.
• The company is responsible only for its own assets, the partner is not responsible for the company's obligations.

Disadvantages:

• Business management is slightly more complicated

Don't know which of the two options is more suitable for conducting your business?
Contact Ducont for an absolutely free consultation on this subject!
We offer a wide spectrum of accounting services, including everything related to company registration and company legal address.

Choose to collaborate with the best for the development of your future business!