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Let's start from the beginning:

forms of business organisation

If you start a new business you have to choose
the best legal form for it.
You have to consider:
● The costs of getting started
● The level of control you want to have: would it
be ok to have some partners?
● How do you want to finance your business?
● How much personal exposure to liability are you
willing to accept?
What is a legal entity?
A legal entity is a company or organization that
has legal rights and responsibilities, for
example the right to make contracts and the
responsibility to pay debts.
Definition of sole proprietorship

J.L. Hanson: “A type of business unit where one

person is solely responsible for providing the
capital and bearing the risk of the enterprise,
and for the management of the business.”

The business is not a distinct legal entity,

separated from the owner.
● Bakery
● Restaurant
● Bed and breakfast
● Artist
● Wedding planner
● Consultant
● Designer (working alone)
Sole proprietorship: negative aspects
● owners manages all the aspects of the
● owners finance the business using their own
● owners bear unlimited personal liability with
all their personal assets: personal properties of
the owner can be used to meet the business
obligations and debts
● while the assets can be sold (including the
name) you can't sell the sole proprietorship to
someone else
Many sole proprietorships perform freelance work, and
many freelance workers are sole proprietors, but these
terms are not synonymous. In fact, they refer to entirely
different aspects of business. One refers to the legal
status and structure of a business; the other refers to the
business relationship between a self-employed worker
and a client. A sole proprietorship is an unincorporated
business owned by a single individual. Freelance workers
are individuals who sell their services to clients but don't
have an employer-employee relationship with any of
those clients. Working just as a freelancer involves less
paper work than being a Sole Proprietor.
Freelance and sole proprietorship
The differences from a fiscal and a social
security point of view can be big and it is
therefore essential to pay close attention to this
choice when deciding to open the VAT number.
One important difference is that a Sole
Proprietor has the legal ability to hire
employees, while a Freelancer doesn't.
A Freelancer can work freely from nearly any
location while a Sole Proprietor must register
the location of the business.
Individual professional studio

Many studios are born with a single owner,

maybe a professional who has previously
collaborated with another studio and then has
decided to start a new business.
The motivation could be the need of autonomy.
Individual professional studio

A single holder bears responsibility for the

performance of the entire professional studio:
the necessity to generate profits; the definition
and maintenance of work methods and
appropriate professional principles; marketing,
promotion and sale of services offered by the
firm to current and future customers; finding the
necessary funds for its operation.
Individual professional studio

It is up to you to you decide how to involve

other people in the activities of the studio.
In case you don't have all the skills or
experience necessary to manage all the
aspects of a studio ( e.g. marketing, quality
control) you could use external consultants, or
appropriately selected coworkers.
Individual professional studio
You may have problems keeping yourself up to
date with all the regulatory and accounting
news. You will be constantly on call, even on
You may not have sufficient assets to
adequately finance the studio. An inadequate
level of capitalization (e.g. an excessive level of
debts) could cause liquidity problems or the
inability to make the necessary investments
( e.g. in training or in technology).
Definition of a partnership

A partnership is a form of business where two

or more people share ownership, as well as the
responsibility for managing the company and
the income or losses the business generates in
accordance with terms of the partnership
General Partnership (GP - snc)

At least two persons are required to form a

partnership. There can be a maximum number
of partners.
Partnership is created by an agreement that
specifies everyone’s rights and responsibilities:
it could be written or oral but is not required.
The business of which the persons have agreed
to share the profit must be lawful.
General Partnerships

Partners have unlimited liabilty: each partner is

personally liable not only for his or her own
actions but also for the actions of all the
A partnership is not taxed as a separate
entity: income, losses, credits, and certain
deductions are passed along to the
partners' tax situation.
Negative aspects
● Changing partners, or the death of a
partner, dissolves a general partnership, so
general partnership interests are not readily
● The share of a partner cannot be transferred to
others (partners or not)
● Sharing decisions is not always easy
Limited Partnership (LP - sas)

The law permits business owners to form a

limited partnership which has two types of
partners: one or more general partners who
run the business and are responsible for its
liabilities, and any number of limited partners
who have limited involvement in the business
and whose losses are limited to the amount of
their investment.
General and limited partners
General partners have unlimited liability for the
debts and liabilities of the partnership.
Limited partners liabilty is limited to the extent
of their capital contribution, so doesn't affect the
partners personal assets.
Your studio could be a partnership.
If you decide to create a new partnership it is
essential to write down the guidelines you
define. Everyone working in the studio must be
aware of the working methods.
If you decide to become part of an existing
associated studio, you will have to accept its
systems, processes, directives and philosophy.
It is a quicker and easier solution but it also
means it could be very difficult to change the
mentality of the other partners.
In small partneships, all members equally
contribute to the funding, participate in the
same measure to the distribution of profits and
all are involved in the process decision. This
formula is often used in the first phase of the life
of an associated studio.
In small partneships, all members equally
contribute to the funding, participate in the
same measure to the distribution of profits and
all are involved in the process decision. This
formula is often used in the first phase of the life
of an associated studio.
An associated study can be constituted with a
private contract (signed in fornt of a notary) or a
public deed. The document must include the
name, surname and professional titles of the
members and must be transmitted to all the
competent professional associations.
The studio must get a VAT number from the
Revenue Agency.
The fees are received by the association and
the profit partecipation rate for the partners vary
according to the amounts due.
The studio is not subject to direct taxes: each
member will be subject to income taxation, in
proportion to the income produced within the
A group of small professional studios can join
together to give life to a larger studio, in order to
reduce costs and achieve greater operational
The best working technologies in the original
studios are transferred to the structure, thus
saving money on costs and / or increasing
revenues. The model obviously assumes that
the buying studio has the capacity to make
decisions quickly and pragmatically and that the
acquired studio is willing to accept its decisions.

Listing your studio on the stock exchange is not

permitted in Italy.
This form of studios doesn't represent a
significant share of the market in the Countries
where listing is possible.
A Corporation
A corporation it’s a legal entity and is entirely
separate from the owners. Corporate property is
legally separated from the property of
shareholders. Corporations can enter into binding
contracts, buy and sell property, sue and be sued,
be held responsible for its actions, and be taxed.
Once businesses reach any substantial size, it is
advantageous to organize as a corporation so that
its owners can limit their liability. Corporations,
then, tend to be far larger, on average, than
businesses using other forms of ownership.
A Cooperative is a business owned and controlled
by those who use its services.
While the ultimate goal of both partnerships and
corporations is to make money and share it, co-
operatives have a different purpose, which
consists - depending on the type of cooperative -
in giving jobs, or consumer goods, or services to
their owners, at better conditions than those they
could get from the free market.
Shareholders have limited liability and there are
limitations in the distribution of profits.
Each shareholder has the right to express one vote in
the shareholders' meeting, regardless of the value of
his / her share (remembert that in corporations the
votes are attributed in proportion to the number of
shares held by each shareholder).
Members are taxed once on their income from the
cooperative itself, and not separately on an individual
and corporate level. For-profit cooperatives are
generally taxed as normal companies but they can
reduce tax exposure by issuing patronage dividends
(refunds issued to people purchasing their goods or