Entrepreneurship: What kind of business is right for you? – Business LoansEntrepreneurship: What kind of business is right for you? – Business Loans

Over the past few years there has been a massive focus on entrepreneurship and entrepreneurship. We have probably all heard about the Good Finance program, where some of Denmark’s biggest entrepreneurs advise and invest in people who are on their way to enter the industry. Equally, it has been impossible to avoid articles with headlines such as “19 years and earning his first million.” In short, the development of entrepreneurship is huge, and it probably has come to stay.

If you burn yourself in with a good business idea, then just get out of the starting hole. But where do you first get to grips with when you need to build your career from scratch? A solid place to start is to decide which type of business is right for you and your idea.

Many forms to choose from

There are gradually a number of business types to choose from. As a starting point, a distinction is made between personally owned smaller companies and companies. When choosing which type of business is right for you, you need to make up your own mind about how much risk you are ready to run with your personal wealth as well as how much capital your business can start with. We’ll take you through the five types of business below, and hopefully you can learn more about where your business fits in.

Sole Proprietorship

This type of business is characterized by the fact that there is only one owner. That is, if you set up a one-man business, you are solely and solely responsible for the company and its finances. The advantage of that type of business is that there is no legal requirement for a minimum amount that you have to shoot in the business for you to create it.

For the same reason, however, you must also prepare yourself for personal liability for the company. This means that if the company goes bankrupt or simply in deficit, then it is your personal finances that must be able to do the damage.

  • you are the sole owner of the company
  • You have limited financial means to start your business

Partnership (I / S)

This type of business can be created when you are a minimum of two people or companies that want to create a business together. Many factors of this type of business lean on the factors of a one-man business. A partnership is thus just as easy to create, as there is no minimum requirement for the initial capital.

Again, however, the owners are so personally liable with everything they own. An additional detail of the partnership is that you will also be jointly and severally liable. This means that if you have to make a loss or go bankrupt, it is the bank that chooses from which owner they withdraw the money. As a rule, they simply take the owner where the money is most readily available.

No matter how well you as a partner know each other, it is highly recommended that you develop a clear partnership contract. It must include, among other things, the rules of play for your cooperation, as well as what should happen in a potential crisis situation. It could be, for example, a plan for what percentage you should each pay for any debt.

You should choose a partnership when;

  • You are several owners of the company
  • You have limited financial means to start your business
  • You as business partners have great faith in each other

Entrepreneurship Company (IVS)

This corporate form is the last new shot on the trunk. Only in January 2014 did it become possible to form an entrepreneurial company. The form of business must be seen as a hand-in for new entrepreneurs who do not have the great fortune to venture into the business right away, but who want to secure themselves financially.

Creating an entrepreneurial company requires a start-up capital of anywhere from DKK 1 to DKK 49,999. You therefore decide within the given financial span how much you want to invest in your company at start-up. The freedom also makes an entrepreneurial company easy to get around, as you can simply choose to borrow money for the business start-up period.

An entrepreneurial company is also called in some contexts a “mini-ApS”. This is because the two forms of business are subject to the same rules and requirements. Therefore, with an entrepreneurial company, you must also register with the Danish Business Authority and establish an executive board for the company.

You should choose an entrepreneurial company when;

  • You have limited financial means to start your business
  • You want to distinguish between your private finances and your company’s finances
  • you plan to start a joint-stock company later, since you can convert tax-free from IVS to ApS when you have equity of DKK 50,000 standing in the company.

Public limited company (ApS)

When you start a partnership, you will meet with a lot more rules and requirements than when you start either a sole proprietorship or a partnership. A limited company can be established by one or more persons or companies. However, there is a requirement that a minimum of 50,000 kroner must be invested in the company before it can be set up as a limited company.

The great advantage of this form of business is that you as an owner do not personally pay for the loss of the company. Thus, a distinction will be made here between the company’s finances and your private finances. For the same reason, however, a requirement is that the company must have a management board and also register with the Danish Commerce Agency.

You should choose a partnership when;

  • You want to distinguish between your private finances and your company’s finances
  • you can afford to put 50,000 in starting capital, either as cash and / or values

Public Limited Company (A / S)

Just as with the creation of a joint-stock company, there are many more requirements and rules when choosing to start a joint-stock company. There must also be a management board here, as well as the company must be registered with the Danish Commerce and Companies Agency. In addition, a limited company requires a somewhat larger start-up capital, which amounts to DKK 500,000. In the case of a limited company, a distinction is made between personal and corporate finances.

It is rarely seen that a company establishes itself as a limited company from the start. This is mainly due to the high start-up capital required by the corporate form. Furthermore, the advantage of setting up a limited company rather than a limited company lies in the external marketing value, since by setting up a limited company you are able to invest more money into the business from the start.

You should choose limited company when;

  • You want to distinguish between your private finances and your company’s finances
  • you have already set up a business that you want to take to the next step.
  • you can afford to put 500,000 in starting capital, either as cash and / or in value

If you want to read more about entrepreneurship, visit our blog and read the article “Denmark’s richest – How do they do?”. On our blog you can also find a lot of good advice for your personal finances and how you generally save money in everyday life.

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