TYPES OF BUSINESS ORGANIZATIONS VOŠ – 3 grade – 2 semester © Markéta Čeřovská

I Definition of a business a business is a legally-recognized organization existing within an economically free country it is designed to sell goods and/or services to consumers its main goal is to make a profit it is any business activity which is not against the law of the given country

conditions given by the state have to be fulfilled in order to start business usually the whole property of partners serves as the liability capital is needed – either of the owner or of another investor there is a body represented by the owner himself or by a deputy or board some form of authorization is needed – either trade licence or licence deed

II Starting a business the person has to be over 18 fully competent his/her penal register has to be without any records that would concern business a confirmation is required from the Revenue Office proving the person has no debts

III Basic types of trades Notifiable trade CRAFT TRADE – beauty services, car repairs etc. REGULATED TRADE – driving school, guide service, providing massages etc. FREE TRADE – purchase and sale of goods Licensed trade

III A) Notifiable trade in order to conduct trade a written report must be given to the Trade Licensing Office 1 CRAFT TRADE we need to have qualification which we can prove by a certificate: a vocational certificate and three years of practice or school leaving certificate and two years of practice or diploma and one year of practice

2 REGULATED TRADE various conditions must be fulfilled in order to be allowed to carry on the conditions are specified in the Trade Licensing Act 3 FREE TRADE no professional qualification is needed

III B) Licensed trade the person has to hold a permission (a licence deed) granted by the state is required or an abstract of record must have professional qualification e. g. taxi service, funeral service, private detectives etc.

IV Cooperatives it is an entity of unlimited number of persons which is set up in order to carry on business or to provide for needs of its members at least 3 members are required in order to set up the cooperative the cooperative is liable with all its property, but each individual member is not liable its working capital comes from members´ deposits there are bodies which make decisions, control or manage the cooperative

V Partnerships Private ownerships Stock corporations it is a body corporate which is set up by a number of people in order to run a business all partners or some of them are liable for liabilities and work in the company in person PUBLIC LIMITED COMPANY LIMITED PARTNERSHIP Stock corporations the minimum basic deposit is given by the law and is required in order to run the business partners are not required to work in the company in person but they have to provide financial deposits LIMITED LIABILITY COMPANY JOINT STOCK COMPANY

Private ownerships V A) Public limited company in order to set up, at least 2 persons are needed, they are liable with their whole assets and they have to register in the business register basic capital is not compulsory as well as the partner´s deposit the liability is unlimited the statutory body involves all of the partners unless it is stated differently in the contract the profit is divided equally among all partners and they are responsible to give taxes from their own part

Private ownerships V B) Limited partnership to set up, at least two persons join together: THE UNLIMITED PARTNER THE LIMITED PARTNER owns a trade licence is registered in the business register is liable with his whole assets is liable only partially by his deposits gives the basic capital according to his own decision has to give at least 5,000 CZK has unlimited liability has limited liability makes up the statutory body acts independently

profit is divided equally between the unlimited and limited partners each unlimited partner receives an equal part limited partners receive profit according to the height of their deposit in case of a loss, the unlimited partners have to meet the liabilities equally but the limited partners are required to do so only in case it is stated in the contract

Stock corporations V C) Limited liability company basic capital is compulsory and it is created by the deposits of the partners the company can be set up by one person, but the maximum of partners is fifty every partner is required to give a deposit every partner is liable the limit of the liability is the height of unpaid deposit the statutory body is formed by agents the profit is divided according to the deposit

Stock corporations V D) Joint stock company basic capital of this business is at least 2 million CZK (or 80,000 EUR) basic capital is divided into a certain number of shares the property of the business is impartible the shareholders are not liable, they would only lose their deposits the company is liable with all its property basic capital is compulsory as well as the partner’s deposit the board of directors forms the statutory body

Sources: JUDr. František TALIÁN. Ekonomika pro obchodní akademie a střední školy. Fortuna 2002. JUDr. Radovan RYSKA, Bc. et PhDr. Monika PUŠKINOVÁ. Ph.D. Právo pro střední školy. 2. vydání. Eduko nakladatelství 2013.