Natural person and legal person

6 April 2009 - 15:53

A company can be legally constituted like Natural Person or Legal Person.

In other words, at the moment that we decided to formalize a company, we must choose if we will constitute under form of the Natural or low Person the form of Legal Person.

We see the definition of each of these functions and position of agent, their differences, and the advantages and disadvantages that each of them presents/displays:

Natural person

Natural person is a human person who exerts rights and fulfills obligations in a personal view.

When constituting a company like Natural Person, the person in a personal view assumes all the rights and obligations of the company.

What implies that the person assumes the responsibility and guarantees yet patrimony that it owns (the goods that is to their name), the debts or obligations that can contract the company.

If, for example, the company bankruptcy and is forced to pay some debt, the person will have to be made responsible in a personal view by her and, in case of not paying it, their personal goods could be obstructed.

Advantages Natural Person

• the constitution of the company is simple and fast, it does not present/display majors proceedings, the required documentation is minimum.
• the constitution of the company does not require of much investment, is no necessity to make majors legal payments.
• it is not demanded to document and to present/display so many countable to them.
• if the company does not obtain the waited for results, the turn of the business can be reframed without no disadvantage.
• the companies set up under the form of natural person can be eliminated or be sold easily.
• the property, the control and the administration fall to a single person.
• the patrimony of the company without no restriction can be extended or be reduced.
• they can take refuge in more favorable regimes for the payment of taxes.

Disadvantages Natural Person

• it has limitless responsibility, that is to say, the owner assumes of limitless form all the responsibility by the debts or obligations who can contract the company, which means that he will have to guarantee these personal debts or obligations with his patrimony or goods.
• capital limited only which can contribute the owner.
• it presents/displays less possibilities of being able to accede on financial credits, the banks or financial organizations are less arranged to grant loans to Natural People.
• lack of continuity in case of incapacity of the owner.

Legal person

Legal person is a company that exerts rights and fulfills obligations to name of this one.

When constituting a company like Legal Person, is the company (and not the owner) who assumes all the rights and the obligations of the company.

What implies that the debts or obligations that can contract the company, are guaranteed and they limit only the goods that can have the company to their name (as much capital as patrimony).

If, for example, the company bankruptcy and is forced to pay some debt, this one will be pleased only with the goods that can have the company to their name, without being able to force to the owner or owners to have to become responsible by her with their personal goods.

Advantages Legal Person

• he has limited responsibility, that is to say, the owner or the owners of the company, assume only of limited form the responsibility by the debts or obligations that can contract the company, which are only guaranteed with the goods, capital or patrimony that can have the company.
• greater availability of capital, since this one I could be contributed by several partners.
• majors possibilities of being able to accede on financial credits, the banks or financial organizations are more arranged to grant loans to Legal People before to Natural People.
• possibility of acceding without majors restrictions to contests public.
• the proprietor and the working partners of the company, can accede to social and safe benefits.

Disadvantages Legal Person

• greater difficulty at the time of constituting it, presents/displays a greater amount of proceedings and requirements.
• it requires of a greater investment for his constitution.
• it is demanded to take and to present/display a greater amount to them of countable documents.
• the property, the control and the administration can fall to several people (partners).
• it presents/displays a greater amount of restrictions at the time of wanting to extend or to reduce the patrimony of the company.
• it presents/displays a greater difficulty to eliminate themselves or to dissolve.

Labels: Creation of businesses

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Related contents:

1. Legal constitution of companies
2. Types of company
3. Steps to set up a company
4. Plan of businesses (Part 5): The organization