PT Perorangan 101: Everything You Need to Know About PT Perorangan in Indonesia

The Private Individual Limited Company (PT Perorangan) has become an appealing choice for individuals who want to run their businesses with better efficiency and legal protection. A PT Perorangan offers convenience for entrepreneurs who wish to operate on a smaller scale, but still have legitimacy and similar access to larger-scale companies. By combining easy establishment, better-managed responsibilities, and stronger legal protection, a PT Perorangan is an empowering option for entrepreneurs to achieve their business goals.

In this article, we will delve into the ins and outs of PT Perorangan in Indonesia. This includes understanding its definition and how it differs from regular PT, the responsibilities, and the significant benefits. We will also cover the procedures for establishing a Private Limited Company in Indonesia.

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PT Perorangan: the definition and the difference from regular PT

PT Peorangan is a type of business operated by a single individual as the sole owner. In a private PT, the owner has limited liability for the company's debts and obligations. The main difference from a regular PT lies in the number of owners, where a regular PT can have multiple shareholders, while a private PT has only one shareholder.

A Private Limited Company can only be established by businesses with a maximum starting capital of Rp5 billion. If an entrepreneur wants to invest more funds, they can opt to establish a regular PT. The proposed capital also affects the maximum annual revenue that can be earned.

For micro enterprises with a maximum capital of Rp1 billion, the maximum annual revenue is capped at Rp5 billion, while for small enterprises with a capital ranging from Rp1 billion to Rp5 billion, the maximum annual revenue is Rp15 billion. In contrast, there are no maximum capital and annual revenue limits for a regular PT.

Another difference is that a Private Limited Company does not require a notarial deed for its establishment, whereas a regular PT must create a notarial deed. In conclusion, the fundamental difference between a Private Limited Company and a regular PT lies in the scale of business that each category can build.

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The benefits of establishing PT and PT Perorangan for Indonesian business

Legal protection for business owners

In both regular PT and PT Perorangan, the company's assets are considered separate from the owner's personal assets. This means that if the company faces financial issues or debts, the owner will not be personally liable for those obligations. This provides a sense of security and certainty for business owners, who do not need to worry about their personal assets being jeopardized by company problems.

The separation of company and personal assets also applies to owners of PT Perorangan, even though the company is established by only one individual. This implies that in terms of liabilities and legal responsibilities, the owner of the company will not be personally involved but rather through the legal entity. In other words, owners of PT Perorangan still enjoy the same legal protection status as regular PT.

Access to capital and investment

Apart from legal protection, a PT also opens doors to larger sources of capital. In a regular PT, business owners can sell shares to investors or apply for loans more easily, helping the company to grow and develop faster. This gives businesses crucial financial flexibility when they face challenges and opportunities.

Presenting professionalism

Having the status of either a PT or PT Perorangan creates a sense of professionalism in the business world. This can boost the trust and confidence of customers, business partners, and potential collaborators. In many cases, business partners are reluctant to collaborate with entities that lack legal standing. This could hinder potential partnerships and the company's revenue potential.

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Responsibilities, duties, and obligations of PT Perorangan

As the owner of a PT  Perorangan, alongside the benefits you gain as a legal entity for your business, you also undertake several crucial responsibilities in managing your business. These responsibilities encompass legal, financial, administrative, and social aspects. Understanding and adhering to these duties is essential in ensuring your business operates without the risks of facing legal issues in Indonesia.

Legal and tax obligations

These obligations involve complying with legal regulations and fulfilling tax payment duties set by the government. It's important to ensure your company operates in accordance with applicable laws, including licensing and industry-specific regulations. Additionally, accurate and timely financial reporting and tax payment according to the schedule determined by tax authorities are vital. Adhering to legal and tax obligations is not only about maintaining compliance, but also avoiding legal penalties and financial troubles that can disrupt your business's continuity.

Employee rights fulfillment obligations

This responsibility involves safeguarding the well-being and rights of employees working for your company. Ensuring your employees have access to fundamental rights such as fair wages in compliance with minimum regulations, social security benefits, as well as safe and healthy working conditions is crucial. Moreover, you need to adhere to regulations related to working hours, leave, holiday bonuses (THR), and other rights associated with their employment. Fulfilling employee rights is not only about legal responsibility; it also promotes a harmonious work environment, fosters a positive work culture, and supports employee productivity and loyalty.

Administrative duties

These duties involve managing company documentation, routine reporting, and maintaining accurate records. Your business must keep and be responsible for all documents related to company establishment, business permits, employment contracts, and financial transactions. Additionally, you need to regularly report to authorities, such as annual financial reporting and company taxation. Administrative duties are crucial for maintaining transparency and accountability in your business operations and ensuring compliance with prevailing regulations. Fulfilling administrative obligations effectively helps you steer clear of legal and financial issues that could impact your business's reputation and continuity.

Social responsibilities

Social obligations include the responsibility to make positive contributions to the community where your business operates. This can involve support for social, environmental, and educational programs beneficial to the local community. Furthermore, you need to ensure that your business operations do not harm the environment or the community. Minimizing negative impact, adhering to ethical business standards, and participating in social initiatives are pivotal steps to maintaining positive relationships with all stakeholders within your business ecosystem. Social responsibility plays a crucial role in building a sustainable and responsible corporate reputation in the eyes of the public.

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Requirements for establishing PT Perorangan

After considering the various benefits that a business can gain by having an official entity, you might be interested in registering your business. It’s important to understand the requirements to establish a PT Perorangan. This process involves a series of steps, ranging from document preparation to official registration. So, what are the requirements?

Meeting the criteria of Small and Micro Business

As explained earlier, only businesses that meet the Small and Micro Business (Usaha Kecil dan Mikro or UKM) criteria, namely businesses with capital below Rp5 billion and maximum annual revenue of Rp15 billion, can register as a PT Perorangan. Additional differences between Micro and Small Businesses:

• Micro Business: Capital below Rp1 billion, with maximum annual revenue of Rp5 billion.
• Small Business: Capital between Rp1 billion and Rp5 billion, with maximum annual revenue of Rp15 billion.

If your business has exceeded this criteria, you are obliged to register your business as a regular PT.

The company must have a single shareholder

One of the main requirements for establishing a PT Perorangan is having a single shareholder. This means that a PT Perorangan can only be owned by one individual, who will be the sole owner of the company. This condition distinguishes the PT Perorangan from a regular PT, which can have multiple shareholders. A single shareholder in PT Perorangan plays a central role in decision-making and ownership. The primary advantage of a single shareholder is the flexibility of having full control in decision-making without requiring approval or consensus from others.

The owner must be an Indonesian citizen

A crucial requirement for creating a PT Perorangan is that the business owner must be a legitimate Indonesian citizen. Additionally, the business owner must be at least 17 years old and legally competent. This criterion emphasizes the importance of business ownership by individuals who possess legal maturity and clear citizenship identity. The minimum age of 17 is chosen as the threshold because it is considered an age at which individuals have the ability to understand and take legal responsibility for the business they intend to operate.

Legal competency status also becomes an important criterion, considering that the establishment and management of a PT Perorangan involve legal and administrative aspects that require understanding and capability for someone to fulfill responsibilities as a business owner. By ensuring that the owner of a PT Perorangan is an Indonesian citizen who is at least 17 years old and legally competent, the government and authorities ensure that business owners have the qualifications and capacity to conduct business with the necessary integrity and competence.

The requirement of authorized and paid-up capital

Every PT Perorangan is required to have an authorized capital amount—a maximum of Rp5 billion according to Indonesian law—set and stated in the deed of establishment. However, to commence operations, a PT Perorangan needs to contribute a portion of this authorized capital, specifically 25%, into the company's business account. This step signifies the owner's genuine commitment to the business's sustainability.

The contribution of paid-up capital is not just a formality; it ensures that the company has sufficient funds to support operational activities and business growth, especially during the early stages of the company. By adhering to the requirements of authorized and paid-up capital, a PT Perorangan demonstrates financial dedication and the ability to operate with credibility in a competitive market.

Maintaining a business account or corporate account

Possessing a valid and verified business account is a critical requirement in the process of establishing a PT Perorangan. This business account serves not only as a repository for the contributed capital, but also as a legitimate transaction channel for all financial activities of the company. Having a separate business account from the owner's personal account is essential to maintaining financial integrity and business transparency.

With a clear business account, the company can easily track income and expenditures, aid in tax reporting, and separate business assets from the owner's personal assets. This also instills trust and confidence in business partners, investors, and customers, showcasing professionalism and a commitment to sound and accountable financial management. Therefore, a valid and verified business account is not just a legal requirement, but also an important step in building a strong financial foundation for a PT Perorangan.

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Aspire, an all-in-one financial solution provider, offers a modern business account that can help you control, oversee, and manage all your business financial activities through a single application.

Steps to establishing a PT Perorangan in Indonesia

Setting up a Sole Proprietor Limited Liability Company (PT Perorangan) involves a series of important steps that need to be followed carefully. These steps include:

1. Choosing the company name: Selecting a company name that meets specific criteria outlined in Government Regulation No. 43 of 2011. These criteria include using the Indonesian language, ensuring the name is distinct from existing registered PT names, having a minimum of three words, and avoiding the use of numbers.
2. Determining the business activities code (KBLI): Identifying the appropriate code for the business activities based on the Indonesian Standard Industrial Classification (KBLI). See the complete lists of KBLI code here.
3. Registering with the Ministry of Law and Human Rights: Businesses need to register the PT Perorangan with the ministry to obtain legal entity status. This registration can be completed online through the official website of the Directorate General of Legal Administration.
4. Registering for company tax ID (NPWP): Obtaining a Tax Identification Number (NPWP) for the company from the Directorate General of Taxation.
5. Registering with the BPJS Employment System: Registering the company with the Social Security Administrative Body (BPJS) for Employment to ensure the protection of employee rights and well-being.
6. Meeting Minimum Authorized Capital and Deposit: Fulfilling the requirements of minimum authorized capital, and depositing 25% of the authorized capital into the company's bank account.
7. Employee NPWP Registration: Ensuring that all employees have their personal Tax Identification Numbers (NPWP) registered.
8. Obtaining Business Identification Number (NIB): Acquiring the NIB, which is essential for official business identification.
9. Routine Reporting: Adhering to administrative obligations by performing regular financial reporting and tax payments according to specified schedules.

Understanding and meticulously following these steps are key to establishing a solid foundation for your PT Perorangan business. Each step has a crucial role in ensuring that your business operates legally, transparently, and in compliance with applicable regulations.

The Aspire business account: a modern financial solution for PT Perorangan in Indonesia

Aspire, a leading fintech company in Southeast Asia with over 15,000 users, offers various benefits designed to help manage your company's finances. One of these benefits is the modern business account, which assists you in overseeing, managing, and monitoring all your business financial activities through a single application. Aspire is the right solution for owners of PT Perorangan businesses looking to expand.

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A notable feature includes a virtual debit card for business payments. The Aspire card encompasses all the advantages of modern virtual debit cards, such as customizable spending limits to issue multiple cards with varying limits for different transaction needs, effectively reducing the risk of overspending.

The real-time monitoring feature in the Aspire app empowers your business to track all transactions using the issued debit cards, thereby reducing the potential for fraudulent or suspicious activities. This capability provides strict expense control over employee spending, which can positively impact your company's cash flow. Beyond its modern features, the Aspire debit card also offers attractive benefits, including unlimited cashback for transactions with leading global merchants like Google Workspace, AWS, Adobe, Figma, Slack, and more.