Choosing the Right Business Entity (Part 3 and last)

The business entity you use can determine the progress and operations of your business, especially in terms of the division of responsibilities and capital. For this reason, the selection of a business entity needs to be seriously contemplated, because different business entities have different freedom of movement.

On Part IPreviously, we have shared about what things need to be considered in determining a business entity. We also explained that basically there are two kinds of business entities, those that are legal entities and those that are not. The difference lies in the separation of wealth. In a business entity in the form of a legal entity, the assets of the founder are separate from the assets of the company. On Part IIPreviously, we described the forms of business entities that are not legal entities. The following are business entities in the form of legal entities that you can choose according to your needs:

Limited Liability Company (PT)

The legal basis for this form of business is Law no. 40 of 2007 concerning Limited Liability Companies (UUPT). PT is a legal entity to run a business, which has a capital consisting of shares, the owner of which has as many shares as the shares it owns. The essential elements of the definition are share ownership which is a limitation of liability for Shareholders because there is an element of separation of personal and corporate wealth. Unlike the CV, the UUPT requires at least: Authorized Capital of IDR 50.000.000 (fifty million Rupiah) to establish a Limited Liability Company, and it can be larger for certain business activities based on the provisions of the Law governing the matter.

This form of business has several advantages in terms of the business owner wanting to expand his business, for example when he wants to apply for a loan for additional capital it can be done on behalf of the PT as long as it is carried out by a party authorized to represent the company in this regard. In addition, the opportunity for companies to participate in activities such as auctions will be opened considering that such activities require participants to be in the form of PT. So there are many opportunities to grow the business through this legal entity.

Foundation

Foundation is a business entity in the form of a legal entity intended for activities in the social, humanitarian, and religious fields. This form has a legal basis for Law no. 16 of 2001 concerning Foundations as amended by Law no. 28 of 2004 (Foundation Law). From the point of view, the foundation has character nonprofit, was not established to enrich the owners of the foundation. However, the foundation can still carry out side businesses that are in line with the vision and mission of the foundation in order to ensure that the operational interests of the foundation are met.

Cooperatives

Cooperatives are business entities based on the principle of kinship and people's economy. Based on Law no. 25 of 1992, Cooperatives have 5 (five) elements, namely:

• Cooperative is a business entity;
• Cooperative is a collection of cooperative persons and legal entities;
• Indonesian Cooperatives are cooperatives that work based on cooperative principles;
• Indonesian Cooperatives are the “People's Economic Movement”; and
• Indonesian Cooperatives "based on kinship".

Cooperatives are business entities whose capital comes from own capital and loan capital. Cooperatives are divided into two types, namely Primary Cooperatives, which are established and consist of individuals, and Secondary Cooperatives, which are established by and consist of cooperatives. Cooperative capital is also divided into two, namely own capital (principal savings, mandatory savings, reserve funds, grants) and loan capital (members, other cooperatives and/or their members, banks and other financial institutions, issuance of bonds and other debt securities).

Hopefully the above explanation can help you choose the right business entity for the business you want to be involved in. Business entities do not only have to be in the form of PT. You can choose a business entity according to your needs and also consider the flexibility of the business entity itself. If you are still in doubt, you can discuss with other startups and learn from their experiences, or go directly to a consultant for questions and answers. May be useful!

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This article was written by Virra from Klikonsul. Klikonsul is a legal and business consultant in the creative economy, including information technology. We can arrange contracts, take care of permits, set up companies, to help with business planning. Further information can be read at http://klikonsul.com.