Things You Must Know About Company Formation

Things You Must Know About Company Formation

Company formation is simply the legal procedure of incorporation of an organization. It can also be called company registration. The term company formation can be also used when formally incorporating a non-domestic business.

There are two types of company formation:

  1. Sole proprietorship whereby there is only one director and one share outstanding.
  2. Partnership Firm,in this case, there are two or more partners who form a legal entity in order to carry on the business activities of the partnership firm.
  3. Sole Proprietorship vs Partnership Firm:

A “sole proprietorship” has the disadvantage of being able to carry on the business activities only for the benefit of the owner(s). On the other hand, a “partnership firm” has two owners who form a legal entity to carry on the business.

Sole Proprietorship is a Low Cost Option for Company Formation

If you are looking for a low cost way of incorporating a RAK free zone company formation, then you should consider the “Sole proprietorship” form of company formation. This option allows you to incorporate a company without making any payments. But, a “partnership firm” carries a number of disadvantages. First of all, the “partnership firm” will have to fulfill the obligations to the trade union and the local employment authority in order to remain valid.

  • Business Entity vs Limited Liability Company

Another low-cost company formation options is to select a “business entity” or “limited liability company” as the company formation and both of these options can availed in Shams free zone Sharjah. It is important to note that these company formation options are not as simple as they may sound. Firstly, it is important to note that there are some differences between these company formation options. It would be helpful if you do a detailed study before taking any decision.

What is an LLC?

One of the company formation options that is very easy to get hold of is” Limited liability company” (or also known as “LLC”). This company formation option is ideal for those who want to establish a company that is not necessarily for long term profit. The company can be set up to pay taxes and dividends on behalf of its investors. It can also be run through an international affiliate system in order to save on costs.

There are other company formation options available. However, they carry greater costs and time commitment. It would be better if you are looking for a low cost way of incorporating your company. You could start off with a “sole proprietorship” company formation process. Once you have established your company, you could take up another company formation options.

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