Choice Of a type of Entreprise

TThis stage consists in adapting to the project of enterprise creation, a juridical framework, which will enable it start with a good legal base. This choice is of great importance because:
1 It conditions the fiscal regime ( types of taxes to pay);
2 It governs the responsibility of the creator in case of bankruptcy ( limited to the property brought or to the totality of his belongings;
3 It influences the attitude of money lenders.
Two possibilities are offered to the promoter: Ask his matriculation as an individual entrepreneur or create a company.

The Individual enterprise (Sole proprietor)

The enterprise and the entrepreneur form one and the same person. It results in:
1 A greater liberty of action: the entrepreneur is the only captain on board and is not accountable to anybody;
2 The professional and personal patrimony are judicially confounded: the entrepreneur is liable for the enterprise’s debts , the totality of his belongings even those of his wife if he is married under the legal regime of common belongings may be engaged in case of debts.
3 The profit of the enterprise will be carried in the declaration of the entrepreneur’s income.
4 The formalities of the creation of the enterprise are reduced (limited).

The Company (Partnership)

Creating an enterprise is the same as giving birth to a new person, judicially distinct from one or more of the associate co-founders. Consequently:
1 The enterprise disposes of its own patrimony: the personal belongings of the leaders- and naturally those of the associates- will be safe from the actions creditors of the enterprise;
2 Using the company’s belongings for personal use can lead to pursuits it is forbidden);
3 The company has a name (social denomination), a residence (headquarters), an disposes of a minimum property consisting of his initial patrimony to engage his first investments and expenditures( capital, social);
4 The leader chosen to represent the company in front of other partners does not act for his own account, but on the name and for the account of a distinct moral person company and should periodically give an account to the associates on his management;
5 At the fiscal level, the company may be personally imposed to the tile of Company Taxes (CT) either on full right or on option.
6 The creation of the company gives rise to complementary formalities at the tax centre and the publication of an announcement in a journal of legal announcements. E.g : Cameroon Tribune

What determines the choice of a judicial form?

1 The nature of the activity: certain activities impose the choice of the judicial structure;
2 The will to associate: one may be tempted to associate wit others so as to put together his competencies, knowledge, field experience…and to build a company with ,others for patrimonial, economic, fiscal or even social reasons;
3 Fiscal needs , when important can be imposed ,in other to welcome investors in the capital;
4 The credibility towards partners (bankers, clients, whole salers…): it is undeniable that to enter into certain markets, the creation of the enterprise under the form of a company with a consequent capital will be recommended.
5 When we have a personal patrimony to protect and or to transmit, the choice of the judicial structure has all its importance.
Constituting a company makes it possible to distinguish your personal patrimony from that of the enterprise and therefore to protect your personal belongings from the actions of the enterprise’s creditors. It is however necessary to note these three points:
i. The judicial bulwark that constitutes the company will be different from one structure to another;
ii. Whatever be the type of the firm chosen, the leader(s) (of will or must) are vouchers of the good management of the enterprise, towards their business partners and others, and can be sued in case a proof of poor management was established.
iii. Finally, at the moment the company will ask for bank expertise, it is probable that the bail of certain leaders or associates will be required.

The promoter will have to take into consideration these different criterias, taking care not to appose or make his choice on only one of them.