Simple joint-stock company vs. Sole Proprietorship – similarities and differences

Simple joint-stock company vs. Sole Proprietorship – similarities and differences This entry will take a closer look at the similarities and differences between the two forms of doing business – the sole businessman and the Simple Joint Stock Company. Despite the rather opposite position of these two distant forms of doing business, there are some common features that are also worth mentioning. Legal form The difference that can be pointed out at the first glance is that the Simple Joint Stock Company, due to its position in the legal system as a commercial law company, is directly subject to the provisions of the Commercial Companies Code. Moreover, it is also a capital company, i.e. the contributions made by the shareholders are of great importance for the formation of the company. In return for their contributions, shareholders receive an appropriate number of shares in the company. On the other hand, there is no personal relationship between the partners in a Simple Joint Stock Company, as is the case with a limited partnership or a general partnership.

Simple joint-stock company vs. Sole Proprietorship – similarities and differences This entry will take a closer look at the similarities and differences between the two forms of doing business – the sole businessman and the Simple Joint Stock Company. Despite the rather opposite position of these two distant forms of doing business, there are some common features that are also worth mentioning. Legal form The difference that can be pointed out at the first glance is that the Simple Joint Stock Company, due to its position in the legal system as a commercial law company, is directly subject to the provisions of the Commercial Companies Code. Moreover, it is also a capital company, i.e. the contributions made by the shareholders are of great importance for the formation of the company. In return for their contributions, shareholders receive an appropriate number of shares in the company. On the other hand, there is no personal relationship between the partners in a Simple Joint Stock Company, as is the case with a limited partnership or a general partnership.

Legal personality The most important difference is that a Simple Joint Stock Company, unlike a sole proprietorship, has legal personality, that is, it is an entity of rights and obligations independent of the shareholders. Thus, shareholders are more separate in property terms from sole traders. In the case of a PSA, shareholders are not directly liable with their assets for overdue social security contributions, unpaid invoices or tax arrears. The company is only liable for its obligations with its assets – this allows for more daring business ventures by limiting the shareholders’ liability for its obligations. Taxes Taxes are an area that counts among the similarities between a sole trader and a Simple Shareholding Company. A PSA can be subject to flat tax in the same way as a sole trader. In addition, both types of company can be a taxpayer of value added tax (VAT). A PSA, just like a sole proprietorship, may also employ staff and pay social security contributions.

Capital An important similarity that links the two discussed forms of business activity is the fact that large capital is not required to establish them – the share capital in a PSA can be at least 1 PLN. This makes it easier for entrepreneurs who do not have much capital to operate this form of business. The role of the owner The role of the owner in both forms of business activity is crucial. In a PSA, the law the owner to be granted special rights, such as the right to appoint persons to the company’s bodies or preference of (founder’s) shares. Summary The Simple Joint Stock Company is a low-maintenance and entrepreneur-friendly form of doing business. It has low capital requirements, low risk of liability for company’s liabilities, greater legal protection and beneficial solutions used also in one-person business activity.