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Unlimited liability company

There are advantages and disadvantages of all types of companies. Which form of business organization that is best for you depends on your situation. But be aware of the disadvantages of sole proprietorships are so strong that most people should consider a different form of organization. NUF companies and are the best options.

The business community, the accounting professional and their branch organization NARF has always warned against the risks you take personally by having a sole proprietorship. You can not hire yourself and loses the ability to unemployment benefits and sickness benefits. All profits taxed as salary and you are personally liable for the company because you and your business are one and the same.

Advantages of sole proprietorship:

When many people choose to establish sole proprietorship in spite of all the “warnings” as this is due to both the corporate form is easy to start, but also that the threshold to start AS is too high. Efforts to simplify the rules and AS in 2012 will probably many sole traders want to switch to AS. At present the following advantages sole proprietorships applicable:

Easy to register and get started.

Not equity requirements.

No claims to the auditor.

Do not claim to own company account.

No requirements for financial statements.

Sole proprietorship suits you when:

When you just need to get started on a hobby project where there is no real ambitions of business activity, or for other reasons, it seems sufficient to have an organization linked to you as a person.

Disadvantages of sole proprietorship:

A sole proprietorship is a private company, and you are personally liable for its obligations. This means that the company may go bankrupt without even being turned too personal bankruptcy. The company’s finances are not separate from personal finances and one can thus easily run the risk of getting a bit “messy” economy for both the company and the individual.

Moreover, one can not employ themselves in a sole proprietorship and thus you have worse social rights than ordinary employees in AS. It is worth to mention that the owner of a sole proprietorship receive only 65% sickness benefit and are not entitled to unemployment benefits if their company should be closed down.

Personally responsible for all the company’s liabilities.

One is turned personal bankruptcy to bankruptcy of the company.

Mixing of the company and personal finances are often messy.

Worse social rights compared ordinary employee, for instance  no unemployment benefit and sickness benefit worse than ordinary employee.

No possibility to optimize taxes between salary and dividends.

Sole proprietorship is not suitable when:

When you want personal security in the form of unemployment benefits and the full right to sick benefits. When you want to save some of the money earned. When you want to keep away your personal funds from the bankruptcy of the business.

 

Order individual company (ENK) NOK 1.100 + mva => NOK 1.375

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