Categories:

Physical Person or Natural Person and a Legal Person

January 1, 2021

154

Everything you need to know about what a physical person or natural person and a Legal person are, main definition, characteristics, differences, examples, and more.

Definition of Physical person or natural person and Legal person

Table of Contents

What is a natural person?

A natural person or natural person is a term used to refer to any individual or real person who has rights and obligations to society, just for the simple fact of existing.

Individuals are able to fulfill their obligations to take when coming of age and are identified by their name and surname. They also have other attributes to identify themselves, such as nationality, marital status, and heritage.

What is a legal person?

A legal person is a concept with which an organization, company, institution, or similar entity is called, made up of one or more individuals, which has the purpose of developing commercial or commercial activities.

This can be of several types since each type has its own characteristics, rights, and obligations. Among them, there are commercial companies, state entities, organizations that carry out controlled and/or regulated economic activities, or those that undertake non-profit actions, such as NGOs (non-governmental organizations).

A legal person allows these entities to have certain obligations and rights of natural persons, in terms of commercial, legal, and/or economic actions.

Characteristics of Physical person or natural person and Legal person

Characteristics of a physical person

A natural person has the following characteristics:

You can take on debts or loans. Before the law, you have the power to assume debt as long as the creditor is willing to lend you. It will pay interest according to the risk it represents for the lender.
Declare taxes, you must make a declaration of your income before the State and pay taxes when it corresponds.
The State must recognize their rights, such as voting, those related to health, social security, and human rights.
You can engage in economic activities by providing professional services, for example, in exchange for compensation (salary).

These are general characteristics of natural persons, however, they may vary according to nationality or if they have more than one nationality, in which case there may be more obligations and/or rights.

Characteristics of legal persons

Legal persons have a series of specific characteristics that define them. Among them, we can highlight the following:

They have a date of birth, in this case, the date of their establishment as a company, organization, or institution.
They manage a tax domicile, which is legally registered.
They have certain assets, determined according to the results of their earnings or their shareholder’s contributions.
They have a nationality and registered office.
They have obligations and rights.

Differences between a natural person and a legal person

A natural person differs from a legal person in the following aspects:

A natural person is personally liable for the debts that a company has, while in the case of a legal person, their debts are limited to the company assets.
A natural person is made up of a single person, while a legal person is made up of at least one person.
The natural person can act as a personal company, while legal persons can have different forms: limited liability company, public limited company, collectively partnership, among others.
The natural person has a greater facility to establish a company in their name (personal company), while the legal person requires a more complex process for its constitution.
The natural person tends to have less access to credit and handle a smaller amount of capital with respect to legal persons.

Examples of the natural person and legal person

Examples of the natural person

Here are some examples of natural persons:

People who provide a professional service in exchange for payment. These are salaried.
People who provide professional service independently. These receive fees.
People are linked to commercial activities (sale of goods or services).
People who make sales through social networks.

Examples of the legal person

There are many legal persons around the world, including:

International companies such as Volkswagen, Nike, Apple, Facebook, etc.
Financial entities such as MasterCard, Visa, BBVA.
Foundations and non-governmental institutions, such as Mercy Corps, Wikimedia Foundation, Greenpeace, Red Cross.
Public and administrative entities of the countries, such as ministries, secretariats, agencies, etc.

Previous articleBusiness Logistics: What is it, Types, and Examples?

Next articleBank Transfer: Definition, Types and Classification, and Commissions