Difference between moral and physical person for new business

If you are considering starting a new business, it is important that you define under what regime you want to do it, since the accounting process that you will have to carry out and the billing method that you will use depend on this decision. This decision must be determined taking into account the type of business in which you want to enter, the line of business and the number of people who will be involved in it, for this in this article we present the characteristics of the two tax regimes of the SAT and the differences between a natural person and a legal entity.

First let’s define what is a natural person and a moral person.

Physical person

The term natural person refers to every human being with the possibility of acquiring rights and responsibilities. Individuals are divided into 5 different tax regimes:

·         Employees

They are employed as subordinates and receive a salary and benefits.

·         Fee

They provide their services independently to companies, government agencies or other individuals and receive financial remuneration for this.

·         Property leasing

These people receive an income for renting real estate such as houses, premises, buildings, among others.

·         Business activities

People who carry out industrial activities, auto transport, commercial activities such as electrical workshops, grocery stores, nurseries, bars, etc. are registered in this regime.

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·         tax incorporation

People who provide services to companies for those who do not want a professional title are integrated into this regime.

To join the SAT as a natural person visit the page: sat.gob.mx/aplicacion/operacion/24452/realiza-tu-preinscripcion-en-el-rfc-como-persona-fisica

Moral person

A moral person is a group of people who come together for a specific purpose known as a corporate purpose. The legal person can also contract obligations and rights and may be made up of natural or legal persons.

The legal persons classified as:

  • For-profit: Its purpose is to receive profits and generate profits through the goods or services provided. Examples of these are financial, commercial, industrial companies, etc. Individuals also have a subclassification.
  • Anonymous society.
  • Company in collective name (SNC).
  • Simple Limited Company (SCS).
  • Limited Company by Shares (SCA).
  • Limited Liability Company (SRL).
  • Cooperative Society (SC).
  • Non-Profit: This type of company does not seek to earn profits directly for the services offered, companies that are dedicated to social work fall into this classification and are classified depending on the type of company they form.
  • Civil Society (SC).
  • Civil Association (AC).

To join the SAT as a legal person, visit: https://www.sat.gob.mx/tramites/33804/inscribe-tu-empresa-en-el-rfc .

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Once the two types of tax regimes have been defined, let’s see the main differences between natural and legal persons:

  1. The natural person will be identified by name while the legal person is known by his or her business name or the name given to the company.
  2. Being a human being, the natural person has a marital status.
  3. Legal entities can only have one nationality, which is linked to their fiscal address, while a natural person can obtain more nationalities, that of birth and others granted through compliance with the requirements requested by the country that grants it.
  4. A natural person is only required to submit a tax return to the SAT if they have income greater than 4 million, while legal entities must submit their return in a mandatory manner so as not to be subject to fines.
  5. Natural persons only acquire an obligation after reaching the age of majority, while legal persons incur obligations from the moment they are created.
  6. Natural persons can choose the activity they wish to develop and change it constantly, while legal persons are limited to activities that are based on the corporate purpose for which they were created.
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Difference between Physical and Moral person

The differences between natural and legal persons are not only limited to their characteristics, but also the way in which they are constituted are different.

Physical person

  • Enter the SAT page and choose the natural person registration option.
  • Follow the steps for pre-registration and make an appointment to go to the SAT offices in your community.
  • When attending the appointment, you must bring your pre-registration acknowledgment, CURP, proof of tax residence, official identification, certified copy of the birth certificate and a USB memory to save your electronic signature (FIEL).
  • After a couple of hours you will have acquired your FIEL key, access to the SAT platform (.KEY) and a password to enter the SAT platform and do your tax returns.
  • With this information you can start issuing authorized electronic invoices.

Moral person

  • Define a business name.
  • Choose a type of company according to the needs of your business.
  • Define who will be in charge of the administration of the company.
  • Set the duration of the partnership.
  • Define the line of business and the activities to be carried out.
  • Select the fiscal domicile.
  • Determine the capital to invest and how it will be provided and managed.
  • Obtain the authorization for the use of the company name here.
  • Choose a notary public to incorporate the company.
  • Go to the notary of your choice to formalize the statutes.
  • Register the legal person in the SAT, you must make a payment for the constitution of the company.

How to choose the best scheme for your company?

The first thing you should do is define the type of business you are going to start and what its scope is, if, for example, you want to work as a freelancer on your own, it would be best to register as a natural person, since you would be the sole owner and legal representative of the company. All obligation and decision will be assumed by you. If, on the other hand, you are thinking of creating a company together with partners and are considering hiring staff, it would be best to register as a legal person. In this case, it is recommended that according to the purpose of your business, you choose the type of company you wish to found. In this way the obligations and rights will be divided among the people who constitute the company.

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Remember that in both cases it is essential that you first have a well-defined business plan and based on that you can make the best decision for setting up your business.

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