The independent student news publication at Kansas State University

Kansas State Collegian

Kansas State Collegian

The independent student news publication at Kansas State University

Kansas State Collegian

Legal aspects of company formation

Legal+aspects+of+company+formation

Many people don’t know how to register a company affordably. If you have found a suitable form of entrepreneurial activity and chosen a commercial name, you can proceed with the registration. There are two possibilities for this: electronic registration via the electronic commercial register portal or through a notary. The commercial register holder will enter your company into the commercial register. Below, we’ll take a closer look at company formation laws and the whole procedure.

Our company will help you establish your own business. We have high professional qualifications, which gives us the opportunity to achieve only the best results for our clients. Our lawyers will also help you register a company offshore.

Registration Essentials: Introduction to Legal Aspects of Company Formation

If you decide to register a company, first of all, you need to decide on the one of legal business structures: will it be a unitary enterprise or a company. A unitary enterprise assumes that the founder of a legal entity is one subject – a citizen or another legal entity.

As an organization, an enterprise is not vested with the right of ownership of the property assigned to it. (This property is owned by the founder if they are an individual, or, in cases where the founder is a different legal entity, it is owned by that entity with economic management rights).

The legal address of a unitary enterprise may coincide with the residential address of the individual who is the founder, which is very convenient, but causes an increase in the cost of utilities. Meanwhile, private enterprises are registered less and less often. The main reason is that currently a business company can have one owner.

Among the key legal business entity structures is an ALC or LLC. That is, an additional liability company or a limited liability company. It should be noted that in the last few years, the number of companies with additional liabilities has approached zero. A limited liability company as a form of ownership, on the contrary, is popular. An LLC assumes minimal liability for participants (founders); the founders of a business company are not liable for its obligations, just as a business company, in turn, is not liable for the obligations of its participants.

To register LLC or any other form of organization, you need a charter of the enterprise. The charter additionally specifies the conditions of the organization’s activities, name, legal address, authorized capital, and so on. After the charter has been written, you must contact the tax service to register as a new entity to pay taxes. Before registering a LLC, you need to resolve the following issues:

  • choose a tax system (the popular simplified one).
  • determine the composition of the founders.

Next, you need to prepare a package of documents.

Thus, if you have 2-3 founders, then you must provide passport information. If there is only one founder, then passport data is not needed. A notarized application for state registration of a legal entity upon creation. Application for transition to a simplified taxation system. Application for use of a cash register, if necessary. According to company formation regulations, the registration application must indicate the next-mentioned.

  1. Name of the company.
  2. Location (legal address) of the company.
  3. Information about the person who has the right to act on behalf of the company without a power of attorney, as well as about the company’s representative by power of attorney.
  4. Information about the authorized capital of the company.
  5. Information on the procedure for distributing profits and losses of the company based on the results of the financial year.
  6. Information on the size of the company’s authorized capital.

IP protection is one of the most important aspects when setting up a business. The owner must register his own mark for the goods and services offered, especially if they concern his own innovative solution. Intellectual property laws strictly protect each newly-registered good or other item in every jurisdiction.

Registration and Compliance Requirements

Registration of enterprises occurs on the basis of an application in a form adopted individually in each jurisdiction. Errors when filling out the application may result in the tax office refusing to accept your documents. We recommend implementing this procedure using our services. This will avoid errors and violations of established requirements.

The applicant must indicate his/her email address in the application. Documents confirming the fact of the registration of an LLC (for example, a certificate of tax registration) are sent by the inspectorate mainly in electronic form. However, this aspect may differ depending on the jurisdiction. Paper documents, in addition to electronic ones, will only be available upon request of the applicant.

To create a business company, more documents need to be drawn up. In addition to the charter, application for registration, order for the appointment of a director, and agreement with the director (or agreement with the manager), it is necessary to prepare minutes of the meeting of founders and the constituent meeting (or the decision of the sole participant, if the company consists of one participant). Remember that before submitting documents to the registration authority, you must pay the state fee for registering a legal entity. After registering with the registration authority, you will need to obtain a certificate of state registration and a notice of registration.

Partnership Agreements Legalities

A business partnership agreement with an individual, between entrepreneurs or firms is concluded in writing. It is advisable to make it concise, but at the same time in such a way that it contains all the information necessary for the parties.

What should be included in the agreement according to the partnership legal considerations?

  1. The purpose of creating a joint venture, the type of its activity. Partnerships can be formed in any area – from the provision of household services to the population to construction or trade. It is important that the goal does not contradict the law. For example, it cannot be stated as a goal that the parties intend to satisfy each other’s financial, reputational, or resource interests.
  2. What is the contribution of each party? This could be property (for example, equipment), intellectual property, money, or even the personal skills of the participant in the transaction. And, if with tangible assets everything is more or less clear – they can be formalized, for example, as a contribution to the authorized capital – then with intangible assets many questions arise and it becomes unclear how to determine their volume. If a partner invests the results of intellectual activity in a joint business, it is recommended to indicate in the agreement that they will subsequently be alienated in favor of the common enterprise. If a party intends to contribute some personal skills (for example, to conduct PR campaigns or search for investors), then it is necessary to clearly establish what exactly this partner will do in business.
  3. The procedure for participation in the affairs of the company. Perhaps it will be more convenient for partners if one person manages the enterprise and the rest control the stages of achieving the goal. There may be another option – each party is responsible for some area. For example, one partner will purchase goods and look for distribution points; the task of another is to maintain accounting records; and the third plans to look for investors.
  4. How profits will be distributed and how losses will be covered. Here, it is important to specify the terms and scope of responsibility. In terms of profit distribution, you also need to decide what part of it goes to further business development.

Our lawyers recommend registering a limited liability company within a month. However, in practice there are cases where you have to wait up to two months. This is due to the fact that there is often a need to prepare documents for registration and subsequently submit them to the registration authority. Forming an LLC will be several times faster with our professional assistance.

The article’s author is Denys Chernyshov – founder and CEO of the globally-famous organization Eternity Law International.

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