What is a private company? Examples

Private company

A private company is an organization created for profit or not for profit whose economic activity consists of the production of goods and services of any kind. Each has its own policies, guidelines, regulations and organizational goals.

In this article, we will explain in detail all types of private companies that exist, the type of economic activity they carry out and the tax obligations they must comply with in tax matters.


We explain how the tax services work.


Classification by economic sector

 These are classified into:


  • Manufacturing or Industrial

Those companies that directly produce and trade the products that they are going to launch on the market.


  • Commercial

Those companies that serve as intermediaries between producers and consumers. In this case, they buy the products already manufactured by the industrial companies to sell them in their respective commercial premises.


  • Services

They are those private companies that produce services that may or may not be essential for consumers. Some of them are:

  • Electricity
  • Water
  • Mobile
  • Leases

To set up a company, it is essential to register it in the Mercantile Registry to legalize the commercial operations carried out by this company. It is important to note that the type of goods and services that the company will amrket should not be condemned by the Law. Examples of them are:

  • rugs
  • Weapons of war
  • Among others


Profit-seeking private companies:

 Profit-seeking companies are those whose business is to obtain profit margins based on the business activities they carry out. These are divided into:

  • Corporation
  • Sole proprietorship
  • Stock company
  • Limited Partnerships
  • Collective Society
  • Limited Company


  • Corporation

Corporations correspond to an agglomeration of several companies that represent the same commercial brand. In some cases, the organizations that make up this business group carry out different business activities independently.


  • Sole proprietorship

 Sole proprietorships are those that are managed by a single owner and it is optional to hire or not more people. Generally, it is small and medium sized entities that develop this type of organization.


  • Stock company

 It consists in setting up a company in which the assets of the entity are divided into shares. Once the company is registered, these can be freely transferred to any partner who directs the organization’s destinations.


  • Limited Partnerships

 Limited partnerships distinguish because two types of partners participate, which are the collective and the limited partners. The former must respond with their respective assets for the results in the management of the company, while the latter only with the capital they invested in the company.


  • Collective society

 The collective partnership is a private company-type company where all partners must respond limitlessly for the debts that the organization contracts even if it is with their personal assets.

It should be noted that the management of this company is exclusive to the partners without third party participation.


  • Limited society

 Limited partnerships are companies in which one or more partners contribute to the establishment and continued operation of the business but do so without the full authority vested in a general partner.

The limited partner generally has limited or no management authority when it comes to the day-to-day operation of the business and is liable only for the organization’s debts up to the value of its investment in the company.


Non-profit private companies

Those that are not intended to make a profit. Examples are:


  • Cooperatives

They are private companies (they can also be public) that offer goods and services not in order to profit, but in order to cover some social need that a particular population presents. An example of this could be foundations for children without home.


  • Tax obligations

Setting up a private company brings along tax obligations, which are the duties that the company has to cover in relation to the taxes established by the State.

Every year the organizations must declare the Income Tax and, in case of receiving profits, a part of it must be paid to the corresponding Government Entity (DIAN) whose percentage will vary depending on the percentage of gross profit.

It is important to note that the company must keep an accurate accounting record of all business transactions that it has carried out. This includes income and expenses during a certain period of time in order to facilitate the calculation of the value of the tax to be paid.


Learn about the benefits of online accounting.


As we have seen, the creation and registration of companies in Colombia is a process that requires full attention and regulation, since this will define the approval of the activity.

Our experts at JLC ​​Auditors want to share with you the step by step you must follow so that your business or company complies with all the requirements established by law before the different national entities, therefore it is important to leave the process in expert hands.


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