Introduction

According to the legal definition, a sole proprietorship is a legal person constituted with part of the assets of a natural or legal person proficient in doing business for carrying out one or several activities of a marketable nature. Once registered in the profitable record, the sole proprietorship forms a legal person.

Sole proprietorship is a commercial figure formed from 1995 article 71 of law 222 that creates that through the Sole Proprietorship a usual or legal person who meets the qualities required to carry out trade, may allocate part of their assets for the understanding of one or various profitable activities.

How do you Set Up a Sole Proprietorship?

How Do You Set Up A Sole Proprietorship_

  • The constitution of a sole proprietorship is solemn since it can be done in writing, that is. A private document or public deed and strictly subject to the rules contemplate in article 72 of Law 222 of 1995.
  • If it constitutes by private document, it must be recognize by the constituent or businessman before a judge or notary or presented personally before the Chamber’s secretary.
  • When any of the requirements contemplate in the rule above is limited or when the document is not recognized by the employer or present personally to the secretary of the entity. The chambers must refrain from registering it.
  • When assets whose transfer requires a public deed are contributed to the sole proprietorship, the company’s constitution must be done the same way. It must also be register in the Public Instruments Registry Office.

What Requirements must the Incorporation Document Meet?

The document by which the company is incorporate must contain the following information:

  • Name, identity document, domicile and address of the entrepreneur.
  • Name or trade name of the company, tracked through the expression “sole proprietorship” or its acronym EU, under penalty of the employer responding unlimitedly.
  • The address of the company.
  • The term of duration, if it remains not indefinite.
  • A clear and complete statement of the main activities, unless stated that the company may carry out any lawful act of commerce.
  • The amount of the wealth makes a detailed description of the assets contributed with an estimate of their value. The entrepreneur will be responsible for the value assign to the goods in the constitutive document.
  • The number of shares of equal nominal rate in which the company’s capital will remain divided.
  • The form of administration and the name, personality document, and administrators’ powers. In the absence of stipulations, it can be understood that the administrators may carry out all the acts include in the plan activities.

Where Should the Company be Register?

The registration application must be an submitted to the Chamber of commerce with jurisdiction where the company will have its main domicile.

When Must the Registration be Renew?

 

From January to March of each year, the commercial registration must be renew to obtain its benefits and avoid legal sanctions.

For the registration renewal, you must fill out the Single Business Cover and pay the rights that the cashier will liquidate.

Remember that the financial information must correspond to the balance sheet as of December 31 of the immediately preceding year.

How is the Registration of the Company in the Chamber of Commerce Carry out?

  • Submit a copy of the private document or public deed and the unique business cover.
  • Fill out the additional registration form for tax purposes, process the Tax Identification Number NIT. And be register in the Unique Tax Registry RUT that the DIAN carries.
  • Cancel the value of the registration fees and registration tax for the constitution document. And the registration fees that the cashier will pay based on the company’s capital.

Recommendations

  • Before assigning a name to the company, verify that in this Chamber of Commerce. There is no registered name equal to or similar to the one to be use.
  • In case of contributions of real estate, including boundaries and real estate registration number and granting the corresponding public deed. In this case, you must present to the Chamber the registration tax payment receipt for the rights cancelled before the Public Instruments Registry Office.
  • Once the sole proprietorship is register with the Chamber, the minutes and accounting books must be register.

What are the Effects of Registering a Sole Proprietorship?

Once registered in the commercial register, the sole proprietorship forms a legal person distinct from the entrepreneur. This means that from the registration there are two subjects of law with legal personality, perfectly differentiated. On the one hand, the sole proprietorship that acquires the category of merchant and, on the other hand. The natural or legal person that gave rise to the first. Each one has its own patrimony and its capacity to carry out the organized economic activity that has been proposing. Consequently, only from the registration is the new company born, independent of the constituent. With the powers and limitations that the same statute grants it to be subject to rights and obligations.

Conclusion

According to the legal definition, a sole proprietorship is a legal entity constitute. With part of the assets of a natural or legal person capable of exercising commerce for the performance. Of one or several activities of a commercial nature.