Individual limited liability company


When people decide to start a business or undertaking, it is important to decide the type of company , the capital and the way in which it can be financed . One of the types of companies most used today is the individual limited liability company which is used as a means to formalize business and to be able to make decisions individually, without the need for partners .


What is a sole proprietorship limited liability company?


An individual limited liability company is a class of legal person in which any natural individual has the ability to acquire the right of legal person constituted by the will of a single person.

  • Characteristics of the individual limited liability company
  • Types
  • Business name
  • Purpose of the individual limited liability company
  • How it is constituted
  • Commercial register
  • Tax regime
  • Organs
  • Management
  • Advantages of the sole proprietorship limited liability company
  • Disadvantages
  • Regulations by country
  • How it differs from a limited liability company
  • Examples

Characteristics of the individual limited liability company

Its main features include the following:

  • It is made up of a person who is the owner .
  • Always it is formed by a person physically .
  • It is purely commercial in nature .
  • It has the ability to carry out civil and commercial operations , except those that are specific to public limited companies.
  • The administration of the company will be in the hands of the owner.
  • It has greater facilities to acquire commercial loans .
  • You do not need to have partners to be able to form the company.


The types of individual limited liability company are two:

Unlimited liability

It is also known as solidarity of society and is related to heritage. In this case the responsibility gives the guarantee to the creditor on a certain obligation. In this case, there is no separation of assets between the employer and the company.

Limited liability of companies

There is the separation of assets between the owners and the company. All the obligations that are contracted with the company will be backed by the patrimony. This is the best way to protect personal assets.

Business name

The business name of the individual company must be immediately and legibly preceded or followed by the words individual company with limited liability or EIRL

Purpose of the individual limited liability company

The main objective of the creation of an individual limited liability company is to be able to promote new commercial initiatives mainly in small entrepreneurs since thanks to it, the assets that have been designated for business activity can be separated from the rest of the assets that they are personal. It also gives the owner of the company the possibility to carry out commercial activities without having to rely on third parties.

How it is constituted

In order to form an individual limited liability company, you must first register it , register it and make the payment of all rights so that it can start operating. A public deed must also be filled out before a notary public as well as a constitution document in which the will to form the company, the type of business and the owner’s data is designated .

Commercial register

Like other companies, the individual with limited liability must be registered in the Commercial Registry on a voluntary basis , this in order to be able to give the company greater publicity.

Tax regime

Individual limited liability company follow the tax rules of the first category . The profits that enter the company must be recorded by a commercial or additional tax as it is also known without there being a loss in the withdrawn profits. It is then taxed on the basis of income which is credited through an accounting process and paying a tax known as the municipal patent.


The bodies that this type of company has are the following:

  • Owner : this is the person who represents the highest body of the company and is the one who also has in his power the decision-making related to the goods and the activities that are carried out.
  • Manager : the owner is in charge of appointing the manager of the company and will have the responsibility of managing the business.
  • Holder-manager : it occurs when the holder decides to take the position as manager of the company at the same time.


The administration of this type of company is in the hands of the owner or owner of the company, however, if he wants to be able to transfer these functions to a manager so that he is in charge of carrying out these types of activities.

Advantages of the sole proprietorship limited liability company

There are several advantages that can be obtained by establishing this type of individual company, mainly the ability to separate personal assets from that of the company. The presence of other partners is not necessary and this makes it possible for the owner to own the entire business . The minimum capital will not be necessary either and the type of accounting that is needed is quite simple which can bring significant savings to the owner. In addition, it has the facility of being able to access credit benefits in different types of financial institutions.


Some of its disadvantages include the inability of the company to carry out a series of commercial and civil activities , which are specifically reserved for Public Limited Companies. The fees to members of the family are not possible or can be used by contract to them. Finally, the presence of an accountant will always be necessary for him to be in charge of keeping all the accounting books.

Regulations by country


It is governed by the Autonomous Work Statute that refers to the worker who is economically dependent.


Its regulations are based on the General Law of Commercial Companies , specifically on articles 58 and 86 of said law. In addition, some of the articles belonging to the Collective Name Society are also applied to this type of company.


In Peru, this type of company is regulated by means of Law Decree No. 21621, which constitute the regulations in charge of regulating them and can only be formed by natural persons.


In this country, the regulations are based on Decree No. 410 of the Commercial Code . Here it can be formed by a legal person or by a physical person as long as they meet the necessary qualities to be able to exercise the type of business they seek to establish.


Its regulations are based on General Resolution IGJ No. 5/2017 .


Its regulations are carried out through the country’s Commercial Code .

How it differs from a limited liability company

The main difference is based on the fact that the individual limited liability company is made up of only one person , unlike the limited liability company which must have at least two partners , a number that can even increase. In addition, the individual company must be specific in terms of the economic activity they carry out, on the contrary, the limited liability company may have several types of activities. Finally, the individual company cannot add partners to the company while in the limited liability company, new people can be added as long as theconsent of the other partners.


Some examples of sole proprietorships with limited liability are as follows:

  • Gyms
  • Consulting
  • Real estate
  • Local shops
  • Franchises
  • Restaurants and commercial premises

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