Status and position of the entrepreneur and the company is governed by the provisions of the Law on Companies.
The entrepreneur, according to the provisions of Article 83 of the Law on Companies, is definied as a natural person with full capacity who is registered in the Business Entities Register and is engaged in a business activity for the purpose of profit generation.
Also the entrepreneur in terms of the Law on Companies, shall be a natural person registered with a special register who carries on a professional activity governed by a special regulation, if this is provided by such regulation. The Law on Companies does not provide the possibility of establishing partnerships business.
A company is a legal entity engaged in a business activity for the purpose of profit generation and shall acquire legal personality by registration in accordance with the law governing registration of business entities.
Law on companies determines the following legal forms of companies: general partnership, limited partnership, limited liability company and joint-stock company.
Entrepreneur or company – differences and comparison
Upon occasion decision making whether you will establish a company or be an entrepreneur you should bear in mind and to know the following important differences between entrepreneur and company:
- in the subjectivity (the entrepreneur is a natural person) ;
- in the responsibility (the entrepreneur is always liable with all of their assets).
An entrepreneur shall be liable for obligations incurred in connection with the pursuit of his/her business activity with his/her all entire assets, and:
- with asset which is acquired by performing an business activity, and
- with other asset which is acquired independent from carriing out of business activity.
Stated responsibility does not stop by deleting of entrepreneur from the Business Entities Register. Creditors have the option to choose the option that is more favorable for them and more efficient.
- entrepreneur can not perform some activities (eg, banking, insurance activities), but additionally for entrepreneurs specifically provided that they can perform both old and art crafts and traditional handicrafts which are determined as such by the minister responsible for economic affairs
- entrepreneur in terms of accounting rules is always in the category of micro legal entities.
Although the Law on Accounting (“Official Gazette of the Republic of Serbia”, No. 62/2013) provides that entrepreneurs in the sense of that law are considered as micro legal entities, that does not mean that entrepreneurs have a legal personality.
The entrepreneur remains a natural person and only for the purposes of the Law on Accounting is considered as a micro legal entity which has certain accounting effects (eg. regarding the obligation to apply the International accounting standards, etc.).
- pursuant to the provisions of the Law on Companies the individual farmer is not an entrepreneur. This is, among other things, important because of the specific obligations which are applied to entrepreneurs (eg. conduct of the book of turnover) but also because of real competence of the courts in case of dispute with these parties (in this case, will not be competent the commercial court than the court of general jurisdiction).
Fiscal taxation on capital income
If the entrepreneur makes profit, the following taxes shall be paid:
- tax on income from self-employment according to rate of 10%
- annual personal income tax (if the entrepreneur during the calendar year achieve income three times higher than the average annual salary per employee paid in the Republic in the year for which the tax is assessed) according to rate of 10% respectively 15% on the amount over six times the average annual salary.
If the owner of the company makes profit, the following taxes shall be paid:
- the tax on corporate profit according to the rate of 15% (paid by legal entity)
- tax on revenue from capital according to the rate of 15% (paid by a natural person – the owner of the capital when withdraw dividend). The dividend is not included in income for the taxation of annual personal income tax in accordance with Article 87 of the Law on Personal Income Tax.
Bookkeeping, agreed taxation
The entrepreneur who pays tax on agreed fixed income from self-employment, he/she is obliged to keep a business book on the accomplished turnover on the form KPO, and if he/she does not fulfill the legal requirements to be taxed in a lump sum she/he should keep her/his books on the single or system double-entry bookkeeping.
The company can in no case be taxed in a lump sum and must keep books by double-entry bookkeeping.
The work of the members of the family
Family members of the entrepreneur can be employed by the entrepreneur without employment, in cases stipulated by Article 89, paragraph 9 of the Law on Companies. In the company family members neither the founders nor the director can not work without employment.
Temporary cessation of operation, strike off from the register of the Surbian Business Register Agency
An entrepreneur can register a temporary cessation of activity, for a limited or unlimited period, but company does not.
In terms of the loss of the entrepreneur status, Law on Companies, in Article 91 provides for a general rule that an entrepreneur shall forfeit the entrepreneur status upon deletion from the register of business entities and that the deletion shall be performed (by deregistration or ex lege) upon cessation of operations.
Strike off of the company can be made only upon completion of liquidation or bankruptcy or as a result of a status change leading to the strike-off of some of the participants from the Companies Register.
Change of legal form, status changes and changes of ownership
An entrepreneur may decide to continue carrying on a business activity in the form of a company, in which case the provisions of Law on Companies pertaining to incorporation of the company form concerned shall apply mutatis mutandis. Pursuant to a cited decision on change of legal form, an entrepreneur shall be deleted from the register of economic operators and simultaneously the incorporation of a company shall be registered, which company shall then assume all obligations of the entrepreneur arising from his/her operations up to the time of incorporation of such company.
The company can not change the legal form into the entrepreneur.
Entrepreneur can not change the owner and can not have the status changes (merger by acquisition, merger by the formation of new companies, division or separation). At the company the founder’s rights can be transfered, in other words the founder of the company may be changed.
The company may change the form of organization, as well as some status changes are possible (merger by acquisition, merger by the formation of new companies, division or separation).