What kinds of liabilities are sole proprietorships subject to?

What kinds of liabilities are sole proprietorships subject to?

Obligations of the sole proprietor

The individual entrepreneur carries out the business activity in his own name, assuming all the rights and obligations. His liability vis-à-vis third parties is universal and he is liable with all his present and future assets for the debts incurred, but? What happens if the entrepreneur is married?

In the case of the separation of property regime, each spouse is the owner of “his/her own”, so the assets owned by the entrepreneur’s spouse will not be affected by his/her business activities.

In the case of the regime of community property – the most frequent in our society – the private assets of the entrepreneur and the common assets of the marriage acquired by the profits obtained from such activities are affected to the payment of the possible debts incurred as a result of the mercantile activities. The consent of both spouses is necessary for the other common assets of the marriage to be compromised.

This consent may be express or presumed. The Law presumes the consent in two cases: when, at the time of marriage, the spouse exercised the trade and continued it without the opposition of the other, and when, although he/she did not exercise it at the time of marriage, he/she assumes it later “with knowledge and without express opposition”.

Individual entrepreneur examples

Income from economic activities: The main characteristic that defines the performance of economic activities is the arrangement on one’s own account of means of production and human resources or one of both, with the purpose of intervening in the production or distribution of goods or services.fiscally, a distinction is made between a professional activity and a business activity. If the taxpayer directly and personally performs the activity, it will be considered a professional activity. If such activity is carried out in an organization (e.g., academy, clinic, etc.) it will be considered a business activity.For the purposes of this tax, the income from the activity is determined by applying one of the estimation methods contemplated in the Law:The choice of the regime and/or its waiver will be made by filling in forms 036 or 037 of the census declaration.

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Simplified Direct Estimation (EDS) is applied to IRPF taxpayers who carry out business or professional activities, when the activity to be developed is not included in the Order of modules or when the EO has been waived.The EDS regime itself also has some limits and exclusion requirements established by regulation (art. The net income from economic activities will be determined by the difference between the income minus the expenses of the activity (following the rules for determining the taxable income established in general in the Corporate Income Tax, which is based on the accounting result).

Individual entrepreneur characteristics

Disadvantages 1.- The self-employed assumes an unlimited patrimonial responsibility, responding with his own patrimony of the result of the activity (losses or profits).2.- The businessman will manage all the fiscal, economic, administrative obligations of the company.3.- In the case of a high volume of profit, it can be forced to pay many taxes by the progressive character of the tax rates (when greater profit, greater percentage of taxes to pay).

Activity Performs the economic activity on a regular basis. Responsibility On own account, being liable with his own personal assets for the results of the activity. Business For profit Capital Voluntary capital contribution with no minimum amount.

Risks Personally and directly, assuming the business risk (profit or loss) of the activity. Control Outside the authority and supervision of another person. Fast Very simple incorporation process, at the beginning of the activity.

The individual entrepreneur is universally liable for all debts and obligations of his business activity, i.e., he will assume with all his personal assets the possible debts generated by his company.  In case of marriage, the assets of the spouse could be affected by the debts or losses of the business activity, depending in any case on the type of assets and the matrimonial regime.  Private assets of the entrepreneur: they are obligated for the running of the business.

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Individual or self-employed entrepreneur

Article 26. Tax incentives for research and development and technological innovation activities, income from certain intangible assets and job creation for disabled workers.

Contribution applicable to workers included in the Special Regime for Self-Employed or Self-Employed Workers in cases of pluriactivity with full-time or part-time working hours of more than 50 percent.

The reasons for this are to be found, in addition to some of the deficiencies that have characterized our model of labor relations, in the absence of greater entrepreneurial initiative among the youngest workers, which has led, in the absence of employment opportunities for others, to higher levels of self-employment capable, in turn, of generating more employment.

To reverse this situation, a change of mentality is needed in which society places greater value on entrepreneurial activity and risk-taking. The cornerstone for this change to take place is undoubtedly the education system.

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