A family business - why not?

Service Business

Currently, the quite common and noticeable lifestyle makes people adopt a rather selfish attitude in everyday life. Me, mine, for me ... The usual family contacts are starting to disappear more and more often. Fortunately, however, there are still families for which family ties are very important. Even to the point where they are considering running a business together.

A family business can operate in virtually any form. However, the choice of one of the available options will depend on both the nature of the settlement and the responsibility assumed by family members, not only the formal one - which is usually unavoidable - but most of all the financial responsibility.

Entrepreneur using the assistance

It happens that the owner of a thriving sole proprietorship would like to use the help of family members to run it, hoping that with their help the company will generate more and more profits. It is possible. However, it should be borne in mind that family members who help in the company, such as husband, wife, children or parents living in one common household, are treated as cooperating persons. Thus, they will be subject to mandatory registration for the purposes of ZUS. This means that the entrepreneur will be obliged to pay the due insurance premiums for them.

In the case of cooperating persons, contributions are usually paid on a similar basis to that of an entrepreneur, except that it is not possible to apply preferential contributions to cooperating persons.

If, on the other hand, family members do not meet the definition of a cooperating person, they should cooperate in the company on the same terms as "ordinary" employees, i.e. on the basis of an employment contract or civil law contracts.

In the case of sole proprietorship, the owner of the enterprise is liable with all his assets for the company's obligations. If he and his wife have joint property, the liability also covers the joint property of the spouses.

Family civil partnership

There are no restrictions for spouses or parents and children to jointly operate in the form of a civil partnership - that is, an agreement between partners signed on a civil law basis. Then, all partners of the company will be obliged to settle the income obtained from the company's operations according to the shares held. When choosing this form of family business, one should bear in mind a relatively high degree of risk. If the company starts to generate losses, they are also divided proportionally for each of the partners. In addition, each individual is responsible for all liabilities of the company, i.e. also for those incurred by the partners. Responsibility for liabilities arising on behalf of the company is not limited to the property owned by the company. Each of the partners is jointly and severally liable with their own private property. The more so, a family business in the form of a civil partnership is burdened with a high degree of risk. This is due to the fact that in the event of careless conduct, all family members may lose their livelihood in one day.

A family business in a form that allows limitation of liability

For people who intend to start a high-risk business, a limited liability company is an attractive form that should certainly be taken into account when choosing the way of doing business. It is a capital company, which means that in order to start a business, you should have a minimum initial capital of PLN 5,000. However, in return, as the name of the company suggests, the liability of partners in the case of a limited liability company is generally limited to the capital held by the company. The partners are not liable for the company's obligations with their own assets, as is the case with a civil partnership. Of course, there are cases where the owners can be held liable, but only if they have clearly taken actions to the detriment of the company, e.g. they did not cease incurring further liabilities when the company's insolvency was undisputed.

Mixed form

An interesting solution may be the choice of a mixed form and the establishment of a family limited joint-stock partnership. For a company that is already operating on the market, has a reputation and has developed a satisfactory position, but needs capital for further development, a mixed form may be a beneficial solution. It will allow you to find investors who will also become shareholders, and family members as general partners will still manage the company, represent it with their name and brand already built. Due to the fact that both general partners and shareholders generate profits from the company, both parties to the agreement will, in principle, strive for continuous development of the company

Expanded activity - possible separation

If the profile of a family business is broad, interconnected, but in principle consists of separate economic areas, it is possible to build a network of related companies. They are headed by the so-called a parent company, the direct partners of which are family members. The purpose of the activities of individual companies is the same - therefore they cooperate and aim at the implementation of the assumed undertaking. In this way, the risk associated with a possible bear market in a given market branch is dispersed.

Choosing the right form of running a family business is not easy. It depends on many factors, including the size of the project, capital held or the type of activities undertaken, as well as the risks they generate. This decision entails establishing the degree of responsibility that family members will assume, as well as the nature of the tax settlements of the company and the partners themselves. Therefore, it is worth analyzing the company's business plan to choose the most optimal form of activity. In the event that reality causes the business to go its own course, it is possible, among others, to transform the originally selected form of activity into another.