How do companies come about
A company is a legal and economic-financial unit, for which the commercial principle, the principle of private property and the principle of autonomy (self-determination of the business plan) are characteristic.
The balance sheet analysis is carried out by companies that are obliged to draw up a balance sheet. But what are the goals of the balance sheet analysis? What do the numbers say about your company? We reported about it in Billomat Magazine.
Characteristics of companies
The formal characteristic of a company is the legal entity (e.g. AG, GmbH). A company can consist of one, zero or several companies. Which structure is chosen depends on the respective corporate objective. The company is characterized by the company name and legal form. Since it is not a locally bound unit, the company can also consist of several companies located at different locations. Business administration sees companies as places of dispositive decision-making processes within a stakeholder network, i.e. the actions and decisions of the company are also influenced by the interaction relationships within the stakeholder network. If companies do not strive for profit, they are referred to as non-profit organizations, a distinction being made in this type of company between economic, socio-cultural, political and charitable non-profit organizations.
Types of businesses
In business law, companies are categorized according to the owner of the property. According to this differentiation criterion, companies can be divided into three groups:
- private ventures
- public ventures
- mixed economic ventures
Mixed economic enterprises are organizations that are operated by a public corporation, although private capital is also involved in the enterprise. Enterprises can also be differentiated according to the chosen legal form. In addition to sole traders, there are also partnerships such as general partnerships (OHG), corporations such as stock corporations (AG) or limited liability companies (GmbH) as well as cooperatives, foundations and mutual insurance associations (VVaG).
Company or operation - what's the difference?
A distinction between company and company is particularly important in the field of business administration. Because from the perspective of business management, that is To precisely differentiate the profitability of a company from the profitability of a company.
What is the profitability of a company?
From an economic point of view, the profitability of a company is characterized by the fact that the highest possible performance can be achieved with as little effort as possible. The more rationally the company works, the higher its profitability.
What is a company's profitability?
The economic interpretation of profitability relates to the relationship between economic success and the capital used for this. The profitability of the company is therefore the measure between earnings and equity. The higher the earnings and the lower the equity capital employed, the better the company's profitability is to be assessed.
What distinction does the legislator make between company and company?
In everyday business activities, the company is usually equated with the operation. A distinction between the two terms is always necessary when a particular objective within the application of law entails a distinction. While tax law and labor law do not require a distinction, business law makes a clear distinction between the two terms. The Civil Code, in turn, makes a distinction between company and business by formulating the two terms in their context.
How does the BGB differentiate between companies and operations?
The Civil Code differentiates between companies and operations by putting them in an order with one another. So a must Always operate a legal entity to have. The legal entity is characterized by a legal form and a name and is therefore considered a company. A company can consist of several companies, but at the same time several companies can act as joint legal entities of a single company.
Company and operation in tax law
Tax law and labor law use the two terms company and company, without a difference close. In particular, tax law does not differentiate between the two terms in detail, since taxation always targets the organizational unit for which the tax liability applies. It is true that the company provides the basis for taxation by generating the income that provides the assessment unit for collecting the tax. And although the company acts as the legal representative of the company vis-à-vis the tax office, tax law regards both equally as carriers of business activity and thus as a unit in their tax obligations.
Company and company in business law
Business law clearly distinguishes companies and operations from one another in terms of their objectives.
- Objective operation
According to the commercial law view, the company pursues a technical implementation of tasks. The company offers the production of goods or the provision of services. For this he must provide the technical means and perform a job. He has to ensure that he implements the production or the service in a form as he has offered to the customer. On the basis of the guarantee of quality as well as the fulfillment of further contractual agreements with his customer, the right arises to raise a corresponding claim for the delivery of goods or the performance of a service.
- Objective company
The company, on the other hand, aims to economically successful to be. The company appears to the outside world as a legal organizational unit and identifies itself through its legal form, such as a GmbH or a businessman. A company can consist of several companies of different types. At the same time, however, several companies can only organize and run one company together.
Further criteria in business law
Business law characterizes the company on the basis of further criteria that distinguish it from the work-related unit, the company. These include, for example:
- Sponsor of the company:
Companies can be run by private individuals or owned by the public sector.
- Financial assets:
Not only the movable objects that are necessary for the maintenance and execution of the tasks in the company belong to the assets of a company. A company is also characterized by immovable values, such as rights to claims, patent rights, trademark rights or other industrial property rights. But the customer base or the reputation of a company are also among the assets recognized by commercial law.
- Legal status:
A company is not only characterized by the right to its assets. The company itself, with all its characteristics that it has acquired in the course of business activity, is also considered to be an independent asset. For example, the German Civil Code protects companies against unfair competition or against access by third parties.
What types of companies are there?
Various legal forms ensure that the organization, type, size and economic strength of companies are externally visible. The The following legal forms apply to companies:
- one-man business
- Sole trader eK
- Civil law society GbR
- open trading company oHG
- Limited partnership KG
- Partnership company PartG
- European Economic Interest Grouping EEIG
- Limited liability company GmbH
- Entrepreneurial company limited UG
- GmbH & Co. KG
- joint-stock company
- Limited partnership based on shares KGaA
- Foundation, endowment
- Mutual insurance associations VVaG
What does the corporate form say about the company?
While sole proprietorships, the GbR, the sole trader or the UG can be recognized as small companies with relatively little economic power, for example stock corporations or cooperatives suggest a strong economic background and are characterized by large workforces.
Which taxes are important for companies?
In addition to the operational tasks of a company and the associated obligations to customers and suppliers, tax obligations also arise when a company is founded. To the central Tax types for companies in Germany count:
- value added tax
- Income tax
- Corporation tax
- Business tax
- income tax
What is sales tax?
The sales tax is regulated in the sales tax law and represents a Consumption or consumer tax. This arises when buying objects or when rendering services. Every taxable company has the obligation to collect sales tax in the form of value added tax from its customers. The company must declare the VAT received as VAT and pay it to the tax office. For this purpose, regular sales tax returns and a final annual sales tax return must be prepared, with which the company reports the sales tax collected to the tax office. In the course of the pre-registrations, the tax liability is to be paid to the tax office.
What is the significance of the input tax deduction?
Companies have the right to claim input tax deduction. The input tax deduction allows the VAT to be deducted from the tax liability. According to this, companies are allowed to deduct the VAT amounts they have paid to suppliers or service providers for goods or services from the VAT amounts they have received and thus lower their tax liability. By generating sales tax, companies make a significant contribution to financing the state budget. Only companies that decide to take advantage of the small business regulation are exempt from sales tax.
When do companies pay income tax?
Income tax is due for sole proprietorships and partnerships, which is regulated in the Income Tax Act. These types of company combine the company with the taxable person. The entrepreneurs must therefore pay income tax on profits and other income that they have generated through their business. The amount of income tax is based on the amount of income, while the tax rates are set in percentage points that increase evenly.
What is corporation tax?
The corporation tax is the counterpart to the income tax and is fixed in corporation tax law. While income tax applies to individuals, corporation tax applies to legal entities such as corporations, cooperatives, associations and foundations. Corporate income tax taxes the company's profits and amounts to 15 percent throughout.
What applies to the trade tax?
The trade tax falls for Corporations, partnerships and sole proprietorships and is collected by the municipality or municipality in which the company is based. Their regulations can be found in trade tax law. The company's earnings within a calendar year are used as the basis for determining the trade tax. The tax rate is 3.5 percent, which is multiplied by the so-called assessment rate of the municipality. The assessment rate varies within Germany and depends on the economic attractiveness of the location. Members of the liberal professions, non-commercial self-employed, as well as farmers and foresters without an entry in the commercial register and with sales below the specified maximum tax limits are exempt from trade tax.
Who has to pay wage tax?
Companies that employ workers must pay the tax office for this wage tax. The income tax is regulated by the Income Tax Act. For the payment of the tax amount, entrepreneurs keep a corresponding part of the monthly gross salary of their employees and pass this on as wage tax together with the wage tax registration to the tax office.
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