• Tue. Oct 20th, 2020

Firms and Their Differences with Other Business Entities

ByAuthor

Oct 4, 2020
Firms and Their Differences with Other Business Entities

Firma is an alliance of business entities to run and develop a business managed by two or more people under the name of a joint venture. Each member of the firm has full responsibility for the company. Because of this shared responsibility, the capital to establish a firm business entity comes from the joint venture of all members. With the concept of collected capital, firms are certainly different from limited liability companies (PT) and Commanditaire Vennootschap (CV) whose capital comes from shareholders or company founders. Likewise, PT and CV are different from each other because they have different terms and scales of business implementation.

Characteristics of a Firm

Every business entity has different characteristics. For example, a Limited Liability Company or PT that may not include the same name as another PT registered with the Ministry of Law and Human Rights. Meanwhile, Commanditaire Vennootschap or CV is a business entity consisting of active allies (investors as well as company leaders) and inactive allies (only being investors). When discussing firms, maybe we focus on law firms that often write down the name of a member followed by the word colleague.

Apart from these characteristics, there are other characteristics that we need to know.

-Establishing two or more people in an agreement.
-Using one joint business name in carrying out all business activities.
-Firm membership is very binding and valid for life.
-The members of the firm have the right to dissolve the firm.
-Each member can make an agreement with the other party.
-In running the firm, all profits are shared proportionally among members.
-The establishment of a firm is usually done by notarial deed, but not an absolute requirement.

Qualities That Are Typical of the Firm

Apart from the characteristics, the firm also has different characteristics from PT and CV. Here are the characteristics of the firm to know.

-Agency or joint representative.
-Limited age.
-Have unlimited responsibilities.
-There is an interest in each member.
-Participation in the firm by all members.
-The business activities are small or large scale.

This can be a small company in one location or a large company that already has branches or offices in many locations. All members can become agents or representatives of the firm association for their business purposes.

A firm’s dissolution occurs when one of the members resigns or dies.
A member’s liability is not limited to the amount invested in the firm.
All investments in the firm are no longer owned separately by individual members.
All members are entitled to the firm’s profits.