4 Easy Steps to Establish a Business Entity

Setting up a business requires many considerations, such as the availability of capital to business management. In addition, you must also prepare business legality to facilitate legal matters such as taxes, applying for credit to banks, to matters of Intellectual Property Rights (HAKI).

In this article, we will discuss the process of establishing a business entity which is quite complicated. However, before that, how to build a CV you need to know first what is a business entity and what are its types.

Definition of Business Entity and Its Types

In general, a business entity is an institution that has legal (juridical) and economic unity, uses capital and labor for the purpose of seeking profit. If classified according to law, the type of business is divided into two, namely legal and non-legal business entities.

By definition, a legal entity separates the personal assets of the owner/founder from that of the company. On the other hand, the assets of the owner/founder in a non-legal business entity do not have a clear separation.

Legal business entities, for example, are PT, foundations, and cooperatives. Meanwhile, examples of non-legal business entities are CV, Firma, UD. Then, if categorized from ownership, there are types of businesses in the form of individuals, cooperatives, BUMN, BUMS, and foundations.

Legal Rules of Business Entity Establishment Procedure

Each type of business has legal rules, both in general and on how to establish it. For example, the procedure for establishing a non-legal business entity such as Firma and CV is regulated in the Commercial Code (KUHD).

Meanwhile, the procedure for a legal business entity has its own legal rules. For example, general rules and procedures for the establishment of PT are regulated in Law Number 40 of 2007. While cooperatives have Law No. 25 of 1992, and foundations in Law No. 28 of 2004.

General Process of Establishing a Business Entity

Although business entities have their respective legalities and procedures for establishment, the ways in which they are established are similar and can be summarized in general steps. The following are general ways to establish a business entity, both legal and non-legal.

Making a Deed of Business Establishment

The first step is that the company must have a deed of incorporation. The deed of establishment itself is an important document containing complete company information, such as name, domicile, line of business, owner of capital, amount of authorized capital, to roles in the organizational structure.

The deed of establishment of the business is drawn up in front of a notary together with the founder of the company and signed by the parties present. Although some companies do not have to have a deed of incorporation, this document is still important as a company ratification as well as a requirement for legal matters.

Manage Business Domicile Certificate (SKDU)

As the name implies, this letter is issued by the local government, namely the kelurahan/village where the company is located. You just need to bring the founder's ID card, a photocopy of the latest Land Building Tax (PBB), and an IMB or rental contract with the building owner to take care of this document.

However, recently, the government issued new regulations regarding this document through Minister of Home Affairs Regulation No.19/2017 and Minister of Home Affairs Circular No. 5003/6491/SJ in July 2019. The content is, the government gives freedom to company owners to independently administer a Business Domicile Statement (SPDU).

Managing the Taxpayer Identification Number (NPWP)

The next step is to take NPWP to the Tax Service Office (KPP) as a certificate to carry out tax rights and obligations. To take care of it, you need to bring the founder's ID card, company establishment deed, and SKDU/SPDU.

All forms of business entity are taxed for income which is the object of taxation. This rule also applies to business entities in the form of foundations if the institution receives or earns taxpayer income.

Managing Business License Number (NIB)

The final step is to take care of the NIB. NIB itself is an identifier for a company issued by an institution Online Single Submission (OSS) in the form of a 13-digit random number accompanied by a security and an electronic signature.

The management process is quite easy, all you have to do is access and follow the steps to fill in according to the type of business on the official website OSS. After getting the NIB, you can use it as a Company Registration Certificate (TDP), Importer Identification Number (API), to customs access.

Those were the 4 general processes for establishing a business entity. Each business entity has a more specific establishment procedure, for example, CV establishment. Therefore, make sure you follow the methods according to the type of business so you don't make mistakes when taking care of it. Happy business!

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