How to start a business

Requirements for the formation of a company

The decisions and actions that need to be taken to form a company are:

Determine the company's line of business. Decide on the type of company. Define three possible names and request, in the case of Mexico, the Ministry of Foreign Relations to accept one of them. Have a company name. Establish the purpose of the company..Define the shareholders and the number, value and percentage of shares. Establish the amount of the share capital. Have information on the general data of the shareholders (names, nationality, date and place of birth, domicile, marital status and immigration status if applicable). foreign). Duration of the company. Company address. Define the way to administer the company (board of directors or sole administrator). Make the appointment of the board of directors. Define the content of the statutes of the articles of incorporation.Appoint and make the appointment of administrators and determine their powers. Appoint and make the appointment of the commissioner.

These requirements must be adapted to the regulations and requirements for opening companies established by each city or country.

Defining the company name

Selecting the name of the company is transcendent, since it can directly express what it does or can do.

The name is the advertising that is and is located everywhere. Creativity is needed to select a good name. A good selection of the company name can influence the results of the sale in the market. The name should convey to customers an idea of what it sells.

It is convenient that the name is related and is compatible with the business of the company. Example: If you are developing advanced technology, you should use words that sound and are related to technology (trying not to overdo it).

There are phrases or words that seem totally innocent to someone but others can be offensive and annoying, so you have to be careful with this.

In general, using your own name can have some drawbacks, since it does not always express what the company does. In the case of a person recognized for his experience, ability and success in any field, it should be analyzed.

The name must be original, descriptive, striking, visible, clear, positive and pleasing to the eye and the ear.

The company logo may include its name or the initials of the words that make it up.

They can also be totally separate, depending on the corporate image you decide to have.

Company registration

After having the authorized name and defined the form of constitution of the company, the statutes are prepared before a notary public.

When the notary delivers the deeds, it is necessary to do the following procedures:

Registration in the Ministry of Finance and Public Credit to obtain the federal registration of taxpayers. Registration in the Public Registry of Property and Commerce. Employer registration and staff registration before the Mexican Institute of Social Security (IMSS). Business registration before the Institute of the National Fund for the Housing of Workers (INFONAVIT). Registration of the company and staff in the Retirement Savings System (SAR). Registration in the treasury of the state, municipality or delegation. Comply with the requirements of the Ministry of Health and Labor (sanitary license). Operation and land use licenses (depending on the company's business). Local fire brigade license (approval request for fire prevention). Registration of trade names, logos, slogans, brands,patents and industrial designs in the Secretary of Commerce and Industrial Development (SECOFI). 2% registration on payrolls. Application for registration to the corresponding business chamber. Registration of accounting and social books. Opening of bank accounts. Preparation of invoices and stationery in general.

There are offices and people specialized in carrying out this type of procedure. Generally, the accountant knows all the necessary procedures to carry out the registrations and registrations that the law indicates. (It is important to clarify that these procedures may vary from country to country).

books

All companies must have the books in which the history of the society will be recorded. According to the type of company, the books established by law must be kept.

The books are divided into accounting and social.

The accounting books are the daily, the largest, the inventory and the balance books. The social are those of minutes of general meetings, boards of directors, monitoring and registration of partners.

Articles of incorporation (statutes)

The articles of incorporation are made up of statutes that are generally drawn up by a corporate lawyer and by the notary himself. These may have variations according to the needs of each company and the agreements that the shareholders have.

Small businesses that are made up of two or more partners must also formalize the articles of incorporation before a notary.

For the constitutive act to be formal, it must be certified by a notary public and deposited in the Public Registry of Property and Commerce.

The registry requests the protocol of incorporation of the company and the payment of rights. This payment is calculated based on the capital registered by the company and the number of attorneys.

investors Assembly

Shareholders are the people who contribute the capital to carry out the company.

The assembly is the highest body of the company and decides who forms the board of directors or if it appoints a sole administrator, as well as any subsequent modification to the share capital or the bylaws.

Typically, the company's shares are divided in proportion to the capital contributed. When one of the partners is going to be in charge of managing the company, special agreements can be made for the distribution of the shares.

Shareholders hold regular meetings. These can be ordinary or extraordinary.

Ordinary assemblies are held at least once a year. They are called by the board of directors or the commissioner. The call must be published in a newspaper with the highest circulation at least fifteen days in advance and must contain date, time, place and order of the day.

It can be established in the statutes that, in addition to the publication, the shareholders, commissioners and alternates are notified in writing, by courier and with acknowledgment of receipt.

The bylaws must establish the minimum percentage of shareholders who must be present at the meeting to consider it legally installed, as well as the minimum percentage of them who will participate in decision-making regarding the destinations of the company.

The latter is important, since it is a padlock that allows minority partners to participate in decisions in situations that are important for the company. Example: suppose that a majority shareholder owns 70% of the shares and a minority shareholder 30%. In this case, it must be established that only 71% of the shares can make decisions to sell or increase the capital or variable capital of the company, sign credit instruments or modify statutes whose modifications harm the minority, which allows the minority shareholder to have way of controlling situations of importance for the future of the company and its investment.

The previous example is also valid to legally consider an ordinary shareholders' meeting to be held on first or subsequent call, in which 71% of the shares must be represented.

Shareholder assemblies are chaired by the chairman of the board of directors, or sole administrator, and is assisted by the general secretary and, in his absence, by those who are appointed to the meeting by a simple majority vote. The person who presides over the assembly designates the tellers, who count the persons, the actions represented and the number of votes each of them casts. Individuals or legal entities that are registered in the shareholders register book are considered owners of shares.

The secretary general draws up a record of what was discussed in the shareholders' meeting, which must be recorded in the minutes book duly signed by the shareholders, the president and the secretary general.

In extraordinary assemblies, the following points are generally discussed:

Extension of the duration of the company. Anticipated dissolution of the company. Increase or reduction of the minimum capital of the company. Change of purpose of the company. Change of nationality of the company. Transformation of the company. Merger with another company. privileged shares Bond issue Division of the company Any modification of the statutes.

Board of directors

The board of directors manages and directs the business of the company and represents the company before all kinds of judicial, labor or administrative authorities, with the widest power for lawsuits, collections and acts of administration. Acts of ownership must have express authorization from the shareholders' meeting.

The board of directors is made up of a minimum of three directors who may or may not be shareholders and who remain in office for as long as the shareholders decide. The council meets as many times as the president, the secretary or a majority of the proprietary and acting alternate directors deems necessary.

The members of the board of directors represent and protect the interests of the shareholders. They are involved in important decisions for the company related to financial matters, salary increases and benefits for executives and when it is necessary to have high-level relationships with government officials, shareholders or directors of important companies. They periodically meet and decide by vote. The statutes of the constitutive act establish the forms of convocation and voting. The board of directors may include business administration experts or scientists with technological knowledge who may be of interest to the company.

The shareholders' meeting or the board of directors can designate among its members, the officials and the positions that each one of the members will occupy in the structure of the company.

The board of directors is made up of:

President, Secretary General, Treasurer, Members, Specialist Advisers.

The functions and powers of each member of the board of directors are established in the statutes.

For decision-making, it is important to define whether or not the president has a casting vote in the event of a tie in a vote by the board members.

In the statutes, it can be established that the calls for the Council sessions must be sent in writing to each of the proprietary and alternate directors, as well as to all the commissioners, at least fifteen days before the session date. and the date, time, place and order of the day should be mentioned.

As in the shareholders' meeting, an act must be drawn up detailing the intervention of each one of the attendees and recording it in the minutes book.

The secretary of the council has the function of writing the terms in which the sessions take place.

An example of the matters to be dealt with, which may be included in the agenda of the call to hold the meeting of the board of directors, are the following:

Attendance list. Quorum declaration and legal constitution of the session. Appointment of president, secretary and scrutineers for the assembly. Balance sheet reading corresponding to the previous year. Report of the board of directors. Report of the commissioner or supervisory board. general manager.Plans and work programs for the following exercise.General affairs.Closing of the assembly.

The call must also include the place, date and time it will be held, as well as the signature of the president and secretary or whoever has the power to call.

Sole administrator

When the partners so decide, they can appoint a single administrator, who will be responsible for the administration and operation of the business and will be able to make the decisions they consider correct without the need to consult the other party.

The partners can sign a private contract in which the obligations, the way of making decisions and the type, content and periodicity of the reports that the administrator must present must be established.

Commissar

The oversight of the company is entrusted to one or more commissioners who are appointed by the shareholders' meeting.

The commissioner cannot be a shareholder and must be a person outside the company.

The main function of the commissioner is to monitor full compliance with the agreements made at the meetings and the accounting records of the company.

Purpose of the company

The object establishes the main activities to which the company will be dedicated.

The main activity depends on the line of business. An example, in the field of advertising, is the following:

Purchase, sale, manufacture, distribution, import, export of all kinds of advertising on television, radio, magazines, newspapers, shows, transport, urban furniture and self-service stores.

Other activities that should be included in the object of most companies are:

Enter into contracts, agreements and all kinds of legal acts; operate in industrial and commercial activities of all kinds; use and exploit all kinds of patents, trademarks, trade names, inventions, industrial models and copyrights; acquire, transfer and lease all kinds of movable and immovable property that are necessary for the realization of the corporate purpose; administer, finance and promote all kinds of companies and associations, etc.

It is convenient to have a very broad object that allows the company to participate in various businesses and activities related to the business.

Powers

It is usual for the shareholders or the board of directors to grant powers to the directors or lawyers of the company. Powers can be used for lawsuits and collections, acts of administration or acts of ownership, titles and operations of credit and labor administration. The powers granted can be executed jointly or separately as decided by the shareholders. But, when you want to limit the powers of attorneys-in-fact, you have to set limitations or grant special powers.

It is delicate to grant powers to people who are distrusted. When an employee who has been granted powers of attorney leaves the company, these must be canceled immediately.

Issuance of shares

Most small and some medium-sized companies do not prepare the titles of the shares of each of the owners because they do not know the procedure. There are special formats to prepare the titles of the shares of a company.

Information containing an action:

Title number Nominal value Covered shares Nominal value of the title Name and address of the company Duration of the company Social capital (minimum and variable) Name of the holder Nationality Address Address Date

The title is signed by the president and the secretary of the board of directors.

When some procedures are delayed, a provisional certificate can be prepared with the same information to later deliver the final titles. These special titles or certificates must be delivered to each of the partners.

Cost of registration and constitution of the company

When starting a company, it is necessary to consider, in the budget, the fees of the notary public for the constitution, registration and preparation of the company's statutes.

Partners

When deciding to form a new company, it is necessary to consider whether it is necessary and / or convenient to have one or more partners, what percentage of the company is willing to transfer and in exchange for what.

To make the decision to form a company, it is necessary to consider whether the parties meet the following requirements:

Adequate profile to work together in harmony. Broad criteria to respect the policies and rules that are established jointly for the operation of society. Adequate temperament to form and participate in a society. Know and accept its responsibility and role it plays in society.

In order to locate potential strategic partners, it is necessary to define what is needed, who has it and who could better appreciate the potential of the business proposal presented to it.

The opportunity to make a good strategic alliance usually justifies giving up part of the business.

There are no simple rules to make an equitable distribution of the company's shares between the proposer of the business, the one who manages it and the one who invests the capital. Investors generally think that it is better to have a good employee, with a decent salary, than to transfer part of the company's shares.

Another point of view is to involve as a partner whoever proposes the business and who will manage it. There may be one capitalist partner and another may be responsible for the administration and operation of the company.

For the investor to transfer shares, he must assess what risk the capital has and how much he can earn.

Establishing fair percentages, so that all parties are satisfied with the negotiations, is important to start working healthily.

A partner can serve different purposes:

Contribute capital (financial resources). As collateral before credit institutions. Share successes or failures. Share losses or gains. Complement skills and knowledge. When you do not have the capital to grow the business. To make a strategic alliance. jointly resolve possible contingencies. Have confidence to be more enterprising. Have more relationships for new business opportunities.

When it comes to capital-intensive businesses or high disbursements for their opening, the recovery of capital is relatively slow, the expectations of permanence and expansion of the business are medium and long term.

Other considerations to be considered in a society are:

Accept that having a partner is like having a boss, since you have to inform him of all the referring aspects of the company. Be willing to participate in the mistakes or successes of others. Be willing to relinquish part of the control of the company. absolute trust in the partner.

One partner can be useful if he is willing to work the same hours as the other and have the same disposition and energy.

In order to make decisions together, previously defined procedures must be established that serve to settle possible differences concerning the different aspects of the company.

Drawing up a list of possible areas of conflict and discrepancies, as well as having a negotiating mechanism in place to immediately resolve differences, helps to maintain a good relationship with partners.

In general, when there is success, it is easier to resolve discrepancies.

In summary, the points to be established in the contract to be signed are:

Admission or expulsion of a partner. Contribution of investment and working capital. Control over future share issues. Distribution of shares and voting rights. Duration of the company. Limitations of individual participation in the same line of business. Participation and distribution of Utilities. Periodicity and type of reports from the management or the industrial partner. Policies for requesting and obtaining credits. Policies and procedures for the dissolution of the company. Percentage of actions they decide. Positions on the board of directors. capital.separate or joint holidays.

When the majority partner has ethical principles and the business is successful, all parties feel satisfied by the society; on the other hand, when there are problems in the company, differences of opinion may arise between the partners regarding how to manage and operate. In this case, the group or person with the most shares should make the decisions.

Some “padlocks” that may be included in the statutes of the articles of incorporation to protect minority partners have already been mentioned above. Control of the company is a bargaining factor, as investors try to minimize risk by having control over the company's momentous decisions.

External advisors

To start a business, it is important to have external consultants who intervene in different aspects of strategic planning and operation.

The external advisors that can be used in small and medium-sized companies are:

Labor LawyerCommercial LawyerPenal LawyerInsurance AdvisorFinancial CounselorGeneral AccountantSpecial Accountant in Tax MattersComputer Systems EngineerExpert consultants in implementing reengineering processes, continuous improvement, strategic planning, etc.

Coordination between external advisers is very important and necessary, since they intervene jointly in some activities and procedures. Example: an external advisor sends some type of documents to another for their knowledge and comments, they take part in work meetings with internal or external executives or they elaborate some document together.

Consultants' fees can be set for a given job or assigned a fixed monthly amount called match.

Bibliography

Fleitman S. Jack, Successful Business. McGraw-Hill, 2000

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Jack Fleitman:

www.ciemsa.mx professional consultants

@jackkmex