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22. 10. 2024.
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Difference Between Entrepreneur and LLC

 

When deciding to start a business, one of the first decisions you need to make is which type of legal entity will best suit your business. In Montenegro, there are two basic forms of organization:

  1. Limited Liability Company (LLC)
  2. Entrepreneur

In this blog, we will show the differences between these two forms.

 

LIMITED LIABILITY COMPANY (LLC)

  1. It can have one or more owners - an LLC can have a maximum of 30 owners
  2. Must have an Executive Director - One person must be declared as the Executive Director and he is legally responsible for the business of the company and authorized to represent the company within the powers defined in the Company's acts.
  3. Owners are liable for the company's obligations up to the amount of the founding capital - This means that if the company has any debts, creditors cannot claim the owners' personal assets, only the company's assets (if any).
  4. In addition to the main activity, it can also perform all secondary activities that are listed in the company's Statute - The main activity and secondary activities are defined by the Statute. Only the main activity can be seen in the Decision on the establishment of the company, and secondary activities, exclusively in the Statute.
  5. Contributions to the director's salary are calculated on the basis of the contracted salary - Depending on the amount of salary stated in the Executive Director's employment contract, the amount of the salary contribution also depends. The salary contributions of the Executive Director are calculated at the same rates as the salary contributions for any other employee.
  6. An LLC is a legal entity.

ENTREPRENEUR

  1. One owner - One entrepreneurial activity cannot have more than one owner
  2. The owner simultaneously performs the functions of authorized and responsible person - The owner is simultaneously a responsible person without restrictions and an authorized person without restrictions
  3. The owner of the business is responsible for the liabilities of his entire property - This means that if the entrepreneur has any debts, creditors can claim from the entrepreneur's personal assets, including bank account funds, vehicles, real estate, etc.
  4. Can only perform the activity for which they are registered — There is only one activity for which they can register.
  5. Contributions to the owner's salary are calculated based on business revenue, the entrepreneur's income, and the average salary in Montenegro from the previous year.
  6. An entrepreneur is a natural person.

Choosing between an LLC and an entrepreneur depends on your business goals, the number of owners, and the level of risk you are willing to take. If you plan to run a business with multiple owners and want limited liability, an LLC may be the better choice. On the other hand, if you want to start a smaller business with a single person and are comfortable with personal liability, entrepreneurship might be a simpler option.

In any case, it is crucial to have a reliable partner for accounting to ensure that all financial aspects of your business are in order.

The Perfectum accounting agency is here to help you. With years of experience and expert associates, we provide comprehensive accounting services, from taxes to opening and closing companies, allowing you to focus on the growth and development of your business.

 

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