In the process of entrepreneurship, the first stage is to have a business idea; then comes the feasibility study and constructing a business plan; then gathering capital and other needs to start-up a business; and then if everything has gone well a company is established. The most important question at this stage is; “What company structure suits best for the business proposed by the entrepreneur?” Or sometimes during the course of running the business, there needs to change the company type because of practical and legal advantages/requirements.

In global terms there are several types of company structures common globally, which are also outlined on Kosovo’s Law no. 06/L-016 on business organizations:

1. Individual Business (I.B): A business owned and run by a single individual,
2. General Partnership (G.P): A business owned and run by two or more individuals
3. Limited partnership (L.P): A business owned and run by two or more individuals, where at least one is general partner (with unlimited liability) and one is a limited partner (with less liability and do not take part in day-to-day business operations),
4. Limited Liability Company (L.L.C): It is the simplest form of corporation in terms of a company. It is a legal structure in-between corporation and partnership.
5. Joint Stock Company (J.S.C): It is a separate entity and composed of shareholders for supplying the capital needed.

The type of company to establish should be decided upon a comprehensive examination of some aspects:

• It should be the simplest company form to meet the minimum requirements of the business,
• It should be in line with the short-medium term growth plans of the business,
• It should be appropriate to the partnership/shareholder structure and capital base of the business,
• It should be the most advantageous company form from the tax liability perspective.

When it is turned into Kosovo practice, the most common legal structures include the above listed global company structures with the addition of branch or subsidiary structures given below:

• Branch Office (B.K): A branch office is the subsidiary of a foreign company operating in Kosovo.
• Representative Office (R.O.K): A representative office is a subunit of a foreign company that operates within Kosovo with its main function to represent the parent company and conduct market research and chase for the business potential in the country.

Other categories include publicly and socially owned enterprises, which do not fall within the scope of this article.

Each company structure explained have some different advantages/disadvantages, requirements, legal obligations and tax duties in Kosovo like anywhere in the world. With a reservation that it is the responsibility of lawyers and public accounts, some brief information is provided below just for the purpose to be a guide on the difference of each company structure in general for MSME owners and managers.

1. Individual Business: This is the simplest and least formal structure for having a business. The downside is that the owner is fully responsible for all the debts and liabilities of the business personally.
2. General Partnership: This is the simplest and most common formal structure for having a business partnership. The liabilities, contributions, and responsibilities are often equally distributed among partners, which one might consider a disadvantage in itself.
3. Limited Partnership: In this constellation, limited partners serve solely investors in the business and they only share in losses and liabilities to the extent of their investment in the company. Whereas general partners are responsible for the day-to-day operations of the business.
4. Limited Liability Company (LLC): An LLC is a legal person that is legally separate and distinct from its shareholders. The shareholders have a limited liability, in relation to the capital structure of the company, for the debts and liabilities of the company.
5. Joint-Stock Company: This is more suited for the large establishments since the formalities and requirements are more complex than LLC. A joint-stock company must have at least two shareholders and a board of directors. The minimum capital requirement for a joint-stock company is € 10,000 (unless it is specified differently by specific laws). The liabilities of shareholders is limited to their capital commitment for the company’s debts and liabilities.

It’s important to note that each of these legal company structures are subject to different requirements, tax liabilities and regulations in Kosovo. It is recommended to consult with a lawyer or a public accountant before deciding on the most suited company type for your business.