Requirements for Establishing a Limited Liability Company: Understand the Complete Conditions Here!

Establishing a PT (Limited Liability Company) is highly recommended for a more comfortable business operation. But do you know what the requirements are for establishing a PT to be recognized and legally operate a business?

A PT, or Limited Liability Company, is a legal entity in the form of a capital partnership. A PT is established based on an agreement and conducts business activities with initial capital divided into shares or as an individual legal entity meeting the criteria for MSMEs as regulated in laws regarding Micro and Small Enterprises. This definition is stated in Article 109 paragraph 1 of Law Number 11 of 2020 on Job Creation, which amends Article 1 paragraph 1 of Law Number 40 of 2007 on Limited Liability Companies.

Requirements for Establishing a PT: Differentiate Based on the Type

The requirements for establishing a PT will depend on the form or type of PT to be established. According to current regulations, there are at least two types of PTs: Capital Partnership PT and Individual PT. Each type and its establishment requirements are detailed below.

1. Capital Partnership PT

A capital partnership is a legal entity established based on an agreement and conducts business activities with initial capital divided into shares. Essentially, you can create this type with a business partner using a clear agreement and mutually agreed upon share or capital distribution.

The requirements for establishing a Capital Partnership PT or a Regular PT, according to applicable regulations, are as follows:

A PT must be established by 2 or more people with a notarial deed made in Indonesian.
Each founder of the PT must take shares at the time of the PT’s establishment.
The PT acquires legal entity status after being registered with the Ministry of Law and Human Rights and obtaining a valid registration certificate.
After the PT obtains legal entity status and the number of shareholders becomes less than 2, within a maximum period of 6 months, the shareholder must transfer part of their shares to another person or the PT must issue new shares to another person.

2. Individual PT

An Individual PT refers to a single-person legal entity that meets the criteria for micro and small enterprises, as regulated in laws on MSMEs. This type is solely for individuals, not legal entities, so you can practically establish this PT on your own. An Individual PT, also known as a UMK PT, is a legal entity where the founder's liability is limited to the company’s capital.

What are the requirements for establishing it?

An Individual PT must be established by an Indonesian citizen by fulfilling the establishment requirements in Indonesian.
The individual must be at least 17 years old and understand applicable laws.
The number of shareholders in this PT is only one person.
The founder of an Individual PT can only establish one Individual PT within a year.

What About the Costs Required for Establishing a PT?

Regarding costs, there are many variables, considering the establishment of a PT requires support from several documents and data validation. After knowing the requirements for establishing a PT as explained above, you can see the necessary costs here. As a disclaimer, the costs listed in this section are ideal costs with clear regulations. If you find different costs, you can directly consult with a lawyer or other capable parties in this matter.

1. Initial Capital

Determine the initial capital to be deposited into the PT. According to the Job Creation Law, this is stated in Article 109 paragraph 3 of Law No. 11 of 2020 on Job Creation. The regulation states that a company must have initial capital, but the amount is determined based on the company's establishment. Further provisions on company capital are regulated in the legislation.

2. Notary Fees

Notary fees are used for services required in creating the establishment deed of the company, which includes the company name, address, capital structure, and others. This document is crucial for the company’s legal standing and its legal status in its activities. The amount varies depending on the agreement and rates set by the notary.

3. Legal Entity Approval Fees

After creating the establishment deed, your company must be registered with the Ministry of Law and Human Rights for approval. The approval fee depends on the amount of initial capital deposited, ranging from 0.1% to 0.6% of the initial capital.

4. NPWP Creation Fees

The cost for creating a Corporate Taxpayer Identification Number (NPWP) can be directly inquired at the local tax office. Usually, creating a Corporate NPWP is free, but you can check the announcements at the local tax office for accurate information.

In addition to the costs above, you also need to prepare some money for other possible expenses. Generally, the necessary costs for establishing a PT have been mentioned above, but changes might occur, requiring updates to the information in this article.

Tips for Establishing a PT and Its Benefits for Your Business

Establishing a Limited Liability Company for your business is recommended to facilitate the business process. After knowing the requirements and costs, you can consider some useful tips for establishing a PT and its general benefits for your business.

6 Tips for Smooth PT Establishment

Plan thoroughly: Create a comprehensive and detailed business plan. With a realistic business plan and financial projection, you can understand the necessary capital and estimate potential revenue.
Choose an appropriate name according to regulations: Avoid using names that contradict general facts and moral norms, names already used by others, names similar to international or other institutions without written permission, and ensure the name is written in Latin letters and matches the business activities.
Structure and shares of the PT: These are crucial for the smooth establishment of a PT. Once these points are ensured, the establishment process will be easier, and business activities will generally run more smoothly.
Complete all required documents: As mentioned earlier, all PT establishment requirements must be prepared in advance. Essential documents include the ID card and NPWP of the company's responsible person, the PT address according to local regulations, and a statement of establishment according to applicable regulations.
Ensure to handle PT licensing first by creating a notarial deed for the PT establishment to obtain legal entity status.
For practicality, use PT establishment services widely available now, but ensure the services are valid and comply with applicable regulations.

9 Benefits of Establishing a Limited Liability Company (PT) for Your Business

A more detailed explanation could be a comprehensive article on its own. However, here are nine benefits of establishing a PT for your business and why it is highly recommended:

Share Capital, Business continuity is ensured even if the company owner changes, thanks to the capital being in the form of shares.
Protected Name, Legally, the name of a registered PT is protected by state law, preventing the approval of duplicate names.
Limited Liability, As the owner or shareholder, your responsibility is limited to the amount of capital or shares you have in the company.
Higher Credibility, A PT is an independent legal entity, not identical to its owner. Business activities are conducted in the company’s name, and all paid-up capital and proof of deposits are recorded.
Simple Establishment Process, If you carefully follow the points explained earlier, the process of establishing a PT is not difficult.
Long-term Operation, A PT can operate indefinitely, as there are no operational limits for the PT itself.
Defined Roles for Company Organs, Each part of the company, whether directors or commissioners, has its distinct roles.
Flexibility in Choosing Business Fields, You have the freedom to choose your business field.
More Favorable Income Tax Rates: PTs often benefit from more advantageous income tax rates.

In general, the requirements for establishing a PT are not difficult to fulfill as long as you have a solid business and comply with applicable regulations. Proper management is key to ensuring the PT runs smoothly, bringing benefits and profits to everyone involved.

As an entrepreneur, understanding the requirements and intricacies of establishing a PT is essential. Equally important is being aware of potential risks and having clear mitigation steps. For this, you can rely on business insurance from AXA Insurance Indonesia, namely SmartBusiness Insurance. The benefits offered are substantial, including compensation for material losses to your PT and personal accident coverage, providing solid protection for your business. Check the details on the related link and use it now to protect your business.

Reference:

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