Legal Aspects of a Business Essay Example for Free

level-headed Aspects of a Business EssayIntroductionWhen leaveing up a newfangledfangled tune it is very important to look at the sub judice aspects which forget influence the connection in the future. In this part of the in machinateation file there will be the most important legal aspects for running a pupil company. First there is the selection of backup organisation form, in which there will be a compairison between the different possible forms. Afterwards a description of how the student company will work with contracts and partners. And finally there is an explanation of the typical dutch legal aspects such as put on valueation and dividend. Business formMost important before starting the actual business is to compare the different possible legal business forms to engender sure that it suits the intentions of the entrepreneurs. First the expanation per legal form will be given and afterwards a choice will be made for the student company itself. There are thr ee basic legal business forms which can be chosen when starting up a new company sole proprietorship, coalition and raft. Each will be described shortly and afterwards the form of the student company will be given.Sole proprietorshipThe sole proprietorship is the oldest, most common, and simplest form of business organization. A sole proprietorship is a business owned and managed by one person. The prevalent characteristic of a sole proprietorship is that the owner is internal from the business. Because they are the same entity, the owner of a sole proprietorship has complete control over the business, its operations, and is financially and legally responsible for all debts and legal actions against the business. An early(a) aspect of the sameentity aspect is that revenue enhancementes on a sole proprietorship are determined at the personal income tax rate of the owner. In early(a) words, a sole proprietorship does non pay taxes separately from the owner. A sole proprietorsh ip is a good business organization for an individual starting a business that will remain small, does not have great exposure to liability, and does not justify the expenses of incorporating and ongoing corporate formalitie.CorporationA potbelly stove is a business entity which is owned by an individual or group of individuals and they run a business that legally exists. A corporate body is formed to regulate and manage business. People work as a unit in a smoke and produce the value that will generate income. A lot of employment is generated by corporations and they have now a big impact on scotch growth and the social development of any country that operates in the free market system. A corporation has rights and responsibilities just like people have, and can also be liable to the processes of law just as an individual can. The characteristics of a corporation are the limited liability of shareholders, management being delegated to a placard of directors, ownership by shareho lders, transferable shares and that it has a separate legal personality.Relevance to Student companyThe detail that the student company will sell shares and therefore will be owned by the shareholders, the student company will be a corporation. Big advantage of this legal form is the spreading of the electric potential business risks because of the large amounts of shareholders. Disadvantages for the entrepreneurs is the limited power at heart the company because of the voice of the shareholders and sharing the possible profit with the shareholders. Within shareholder meetings important decisions or problems will subject and together with the entrepreneurs the business strategies are come out.Contracts with other partiesBecause the student company will be a trading company it is very important to make clear arrangements with the suppliers, customers and the entrepreneursitself. This will split the the risks of the entrepreneurs as well as the business partners in the buying cycl us. Because it is lock up not clear what kind of product or service the student company wil sell, this will be researched later on in the market research.Laws and taxesWhen somebody wants to start up a company within the netherlands this person should notify the midland Revenue as soon as they know when their company plans to start business. If this person starts as sole jobr, a partnership, a limited partnership or a partnership under common firm, he or she can register the company for the Inland Revenue and the trade register at the same time. This can be done at the Chamber of Commerce. It is to your advantage to post this information at an early stage new companies which have made investments in their business lots receive money back following their first value added tax return .This is because a new business often pays more value added tax in the beginning than it has actually turn ond.Value added taxIt is almost always compulsory for businesses to charge clients value ad ded tax. Businesses are nearly always liable to charge value added tax to their clients. The rate is 6% or 19% depending on the type of product or service. The value added tax which a company receive from the client must be paid to the Inland Revenue. The value added tax which the company has paid out itself to the suppliers can be offset against this. Value added tax is paid either monthly or quarterly, depending on the type of business and the level of turnover.Corporation taxIf the company is a private company with limited liability, the owners will be liable to pay corporation tax. Corporation or corporate income tax is levied on companies established in the Netherlands and on certain companies not established in the Netherlands, which receive income from the Netherlands .In this context, the term company includes companies with a capital consisting of share, co-operatives, mutual insurance and credit companies, foundations and other legal persons incorporated under civil law, w hen they administer an enterprise, funds for common account, and most humankindly-controlled industrial and commercial undertakings.Basis of assessmentProfits in the widest sense, with a arrive of additions or deductions. The determination of the rateable profits corresponds largely with the determination of profits taxable under personal income tax, including the deductibility of losses from other years.ExemptionsLegal persons whose activities are of a social or charitable nature or otherwise in the public matter to are exempted from corporation tax. Exempted categories of profit are those corresponding to the relevant exemptions under personal income tax. furthermore the participation exemption applies to all dividends, gains and losses related to the holding of at least 5% of the shares in a subsidiary. This rule, preventing economic double taxation, is in general equally applicable to dividend deriving from domestic and alien subsidiaries.The loss related to the winding-up of a subsidiary is, under certain conditions, deductible by the parent company. The deductibility of interest paid on non-functional loans and loans related to a reshuffle of participations within the group is restricted to certain circumstances. another(prenominal) amendment permits companies to depreciate loss-making participations of 25% or more during the first five years after acquisition.Special features monetary adept a company which holds 100% of the shares in a Dutch subsidiary may pass to be qualified as a fiscal unity. However, certain conditions apply. It is possible for a fiscal unity to be consisted of more than two companies. The subsidiaries are considered to be absorbed by the parent. As a result, oppose results of companies belonging to the unity can be compensated horizontally with positive results of the others. Interest paid to a group company in respect of the acquisition of shares in Dutch operating companies cannot be set off against the profit of these op erating companies. Regime for investment funds provided that all current income is distributed to shareholders and a number of other conditions are met, aninvestment company or fund is entitled to add capital gains on securities and real property to a reinvestment reserve and to a rate of nil per cent on the remain profit.