Legal Structure, Licenses and Taxes

This week we learned about the Legal Structure we need to apply in order to start our business and the licenses, permits and taxes we need to consider obtaining.

I mostly researched about my country and its laws and I found out a lot of interesting things like the different legal structures we have and how they can be convenient or not depending on the business idea and model.

In my country we have a structure that seems the most appropriate for my business, and is called “monotributo”. It is similar to the Sole Proprietorship in the US, the difference is that you have a fixed monthly fee, that includes the health insurance, retirement benefits and the taxes. This fee does not vary over time unless, you surpass a limit amount per month, which is unlikely to happen.

The downside of this structure is that if you have any problems, legal issues you are completely responsible for everything. Another downside is that in the even that you can not pay the fee you may be charged a fine and suspended to do any type of business.

I think that this structure is great for entrepreneurs because it doesn’t require much money or time to start, and you can dissolve it whenever you want. But if the business is going well, I would change to another structure that protects me more and gives me the possibility of hiring people.

I also learned about the legal structures in other countries and my classmates found interesting information about the US, here are some of the links they shared with useful information:

https://business.idaho.gov/

http://en.wikipedia.org/wiki/Sales_tax

http://www.doingbusinessinmexico.com/articulos/articulo.php?articulo_id=98

http://www.utah.gov/business/starting.html

When it comes to licenses and permits for doing business in my country I think I need to have into account the following points:

 

  • Register my brand in the INPI (similar to the ABN in the US) and also in some cases is important to register the name of the products as well.
  • Have a domain name in order to be able to register the business in the legal entity.
  • Choose the legal structure that best suits the business and request the permit to start a business. This is done by presenting the necessary forms in the AFIP (governmental entity) and in some cases also in the IGJ (general inspection of justice).
  • Establish terms and conditions and a privacy policy in order to explain the rights and obligations of each part. This will protect the business of any legal issues in the future.
  • Work in compliance with the Customer’s protection law (Ley de defensa del consumidor),especially when it comes to the obligation of keeping the customers informed of everything related to the services offered and the T&C. It is also required that the price is informed in Argentine pesos including any extra cost for the services.
  • If applies to the business it would be important to work in compliance with the Protection of Personal Information Law by signing up in the DNPDA (Department of Protection of Personal Information).

National and State (Province) Taxes

Depending on the legal structure is necessary to pay different taxes. In the case of choosing a SP there is a fixed monthly fee for each category which covers, health benefits, retirement benefits and income tax. The category will vary depending on the expected income of the business.

According to this legal structure’s regulation I would also need to pay a 3% sales tax in case of exceeding a limit amount defined by the category of the business.

Useful links that I found:

http://www.afip.gob.ar/sitio/externos/

http://www.informaticalegal.com.ar/

http://www.serautonomo.net/argentina/como-calculo-los-ingresos-brutos.html

http://www.inpi.gov.ar/

 

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