Corporation as a form of business

A corporation is a “legal entity”.

If you run a corporation, you must strictly separate the private sphere from the corporate sphere for accounting and tax purposes. The company assets are separated from the private assets of the shareholders. This has the advantage that shareholders of a corporation are only liable with their paid-in share capital and are responsible for creditor protection.

For the formation of a corporation, a partnership agreement is mandatory, in which the legal relationship between the corporation and its partners is regulated. The notarized formation and registration of the company in the Commercial Register (in section “B”) are also legally mandatory for corporations.

According to the Limited Liability Company Act and the Stock Corporation Act, the shareholders of a corporation must make and prove a capital contribution to the corporate account.

The corporation pays the taxes due for the corporation.

Corporations are also subject to the obligation to register a trade, with the consequence of paying trade tax to the local government.

There are two dominant forms of corporation, namely the private limited liability company and the stock corporation, also called public limited company (plc).


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