Company forms in a nutshell
- What is the easiest and fastest and cheapest form of business? The answer to this question is simple: if you become a self-employed person. You can get started very quickly and easily: you fill in a form through the customer portal, then you will receive your tax number in a day or two, and you can start a business! You buy a billing program or use a free version and that’s it. You don’t even have to open a separate corporate bank account, you can feel free to enter your private bank account number.
- If so simple, what are the disadvantages of this form of business? Most of all, as a self-employed person, your liability is unlimited. If you carry out an activity, e.g. providing an intellectual service where you have little chance of causing harm or accumulating debt is not such a big deal. However, you should keep in mind that a person can only take on unlimited liability in one place, so if you are already a member of a Limited Liability Company, you cannot become a sole proprietor. Needless to say, as a sole proprietor, you can opt for highly reduced itemized taxation even with personal VAT exemption.
- What forms of social enterprise are there? Of the company forms, the limited partnership is one of the options, it is usually a family business. The point is that it consists of two members: the insider assumes unlimited liability, while the exterior member is liable only up to the amount of his or her property deposit, which can be as little as a few thousand forints. A long time ago, an outside member was called a silent partner, who did not give his name to the company, only took out his share every year, but in the fight against money laundering and terrorism, such an option is obviously out of the question. A limited partnership also needs a managing director: how strictly the court of registration takes this varies from county to county, but if you want to be sure, you have to appoint an insider as a managing director. The limited liability company already incurs legal fees, because the partnership agreement must be submitted to the court of registration, and you must also open a separate company account.
- What do you need to know about a limited liability company? Among the company forms, the Ltd. means a limited liability company, ie the liability of the owners only lasts up to the share capital, in return, of course, it is not enough to deposit a few thousand forints, but currently the expectation is HUF 3 million. Although you do not have to pay all the HUF 3 million right at the beginning, at the time of establishment, if you pay a smaller amount, it will have to be reimbursed later, as no dividend or advance payment can be made until then. You may have the option of not paying up the share capital in cash, it may be expressed in assets and intellectual property rights, but if you have to settle for debts, do not swim to stand up to the minimum value of HUF 3 million. The Ltd. a Bt. Similarly, it usually has a articles of association and a managing director.
- So then I either do business alone but have unlimited liability or I partner. Not necessarily. For example, one-person Ltd. has been available for some time. opportunity. That is the difference between a multi-person Ltd. Compared to the articles of association, there is a memorandum of association, and instead of the general meeting, the sole owner decides on the year-end and the dividend. The one-person Ltd. the biggest disadvantage of a sole proprietorship is that it can in no way opt for itemized KATA taxation.
- What do you need to know about larger companies, what form of company do they operate in? The Ltd. is followed by Zrt., Ie Zártkörűen Működő Részvénytársaság. Similar to the Ltd., only the share capital is much higher, HUF 5 million, and the company’s senior representative is not called a managing director.
- The “real” joint stock company is Plc., Right? Yes, a Public Limited Company is public from the fact that it is listed on a stock exchange, the price of its shares is constantly changing in stock exchange trading. Plc. the most complex organization, headed not by a single person but by a multi-member organization and the organizations that oversee it, and the company has a lot of reporting obligations. Plc. its biggest advantage is that since a wide variety of people subscribe for shares, a huge amount of capital can be raised right from the start – not in the form of a bank loan, but in the form of a shareholder becoming a shareholder in the company.
For some detailed rules on company forms, it is worth reading the Civil Code and the relevant rules. If you have a specific question or if you are unable to decide between company forms, feel free to consult the expert advice of attorneys available at Legisly .
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