Legal Aspects of a Business Essay

IntroductionWhen outset up a new line it is precise big to look at the sanctioned aspects which go forth influence the high society in the future. In this part of the in turnation file in that location go forth be the most important legal aspects for listning a school-age child connection. First there is the selection of railway line form, in which there bequeath be a compairison between the different assertable forms. Afterwards a description of how the student companion leave work with contracts and partners. And finally there is an explanation of the typical dutch legal aspects such as improvement levy and dividend.Business formMost important before starting the actual business is to comp be the different possible legal business forms to make sure that it suits the intentions of the entrepreneurs. First the expanation per legal form will be given and afterwards a choice will be make for the student corporation itself. There are three basic legal business forms which can be chosen when starting up a new companionship bushel proprietorship, partnership and slew. Each will be described shortly and afterwards the form of the student friendship 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 inseparable 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 amenable for all debts and legal actions against the business. An different aspect of the sameentity aspect is that taxes on a sole proprietorship are determined at the private income tax rate of the owner. In other words, a sole proprietorship does not pay taxes separately from the owner. A sole proprietorship 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 corporation 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 form to regulate and manage business. People work as a whole in a corporation and produce the value that will throw income. A lot of employment is generated by corporations and they have now a big impact on sparing growth and the social victimisation of any country that operates in the free market system. A corporation has rights and responsibilities just like people have, and can also be nonresistant to the processes of law just as an individual can. The characteristics of a corporation are the limit liability of shareholders, management being delegated to a board of directors, self-will by shareholders, transferable shares and that it has a separate legal personalizedity.Relevance to student companyThe fact 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 bedcover of the potential business risks because of the large amounts of shareholders. Disadvantages for the entrepreneurs is the limited power within the company because of the voice of the shareholders and sharing the possible pelf with the shareholders. Within shareholder meetings important decisions or problems will subject and together with the entrepreneurs the business strategies are set.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 cyclus. Because it is still 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 soulfulness wants to start up a company within the netherlands this person should send word the landlocked Revenue as soon as they know when their company plans to start business. If this person starts as sole divvy upr, a partnership, a limited partnership or a partnership downstairs 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 provide this information at an early represent new companies which have made investments in their business often collect money back following their first value added tax spend .This is because a new business often pays more value added tax in the beginning than it has actually charged.Value added taxIt is almost of all time compulsory for businesses to charge clients value added tax. Busine sses are nearly always conceivable 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 apt(predicate) to pay corporation tax. Corporation or corporate income tax is levied on companies established in the Netherlands and on authorized 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 policy and credit companies, foundations and other legal persons incorporated under civil law, when they administer an enterprise, stores for common account, and mostpublicly-controlled industrial and commercial undertakings.Basis of sound judgmentProfits in the widest sense, with a number of additions or deductions. The determination of the dutiable profits corresponds largely with the determination of profits taxable under personal income tax, including the deductibility of losses from other age.ExemptionsLegal persons whose activities are of a social or charitable nature or otherwise in the public chase 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 relate 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 home(prenominal) and foreign subsidiaries.The loss related to 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 attainment.Special featuresFiscal unity a company which holds blow% of the shares in a Dutch subsidiary may request 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, negative results of companies belong to the unity can be compensated horizontally with positive results of the others. pursuit 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 operating 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 rest profit.