Start your business
Welcome to the world of business possibilities! Embarking on the journey of starting your own business in India requires careful consideration of the types of business organizations available. Each entity has distinct features, advantages, and drawbacks. Let’s delve into these options to guide you in making a well-informed choice based on Indian standards:
1. Sole Proprietorship:
- Overview: This is a simple business owned and run by one person.
- Advantages: You have full control, it is easy to set up, and you get direct tax benefits.
- Disadvantages: Limited resources, proprietor is personally responsible for everything, and unlimited liability on personal asset.
2. Partnership Firm:
- Overview: A business run by two or more people sharing profits and responsibilities. it is a group of sole proprietorship running a business. Partnership firms in India are, governed by the Indian Partnership Act, 1932
- Advantages: A General Partnership proves more cost-effective to initiate than an LLP, with long-term affordability from minimal compliance obligations, making it an economical choice.
- Disadvantages: You share profits, there could be conflicts, and unlimited liability for partners.
3. Limited Liability Partnership (LLP):
- Overview: A mix of a partnership and a company with limited liability for partners. LLP is relatively a cheaper approach to incorporate as compared to a Private Limited Company and requires fewer compliances.
- Advantages: LLP has less compliance to follow than other companies under the companies act,2013.
- Disadvantages: Not suitable for Scalable Businesses - If your business envisions scaling up and may require equity funding, opting for an LLP might not be the most suitable choice. The structure, while offering benefits of a private limited company and general partnership, may not align with the scalability needs and financial requirements of certain enterprises.
4. One Person Company (OPC):
- Overview: A company for one person as a separate legal thing. An OPC means a company with only one person as a member. Share holder can make only 1 nominee, he shall become a shareholder in case of death / incapacity of original stakeholder
- Advantages: Sole proprietorship with limited liability, low compliance and easy to transfer. - Disadvantages: Maximum number of shareholders is one, the company have to convert
- Disadvantages: Maximum number of shareholders is one, the company have to convert into private limited for the addition of shareholders.
5. Private Company:
- Overview: A private limited company is a separate legal entity with minimum of two shareholders.
- Advantages: Private entity with full control, easy scalable and stability of business.
- Disadvantages: Shareholder’s right to transfer shares is restricted, an invitation to the public to subscribe to any shares or debentures or any type of security is prohibited.
6. Public Company:
- Overview: A public limited company is a separate legal entity with minimum of seven shareholders.
- Advantages: There is no limit for the members, An invitation to the public to subscribe to any shares or debentures or any type of security is permitted and shareholder’s right to transfer share is not restricted.
- Disadvantages: More compliance, no privacy and control issues.
7. Co-operative Society:
- Overview: A business run by a group with common interests. A co-operative organization is a group of people who come together to reach a shared economic goal. They control the organization, each contributing fairly to the needed fund, and everyone shares the risks and rewards of the effort
- Advantages: Easy to form, Limited Liability and suitable for social works.
- Disadvantages: Conflicts, lack of privacy and difficult to scale.
Connect with us today
Navigating the diverse landscape of business structures is a crucial step in laying the foundation for your entrepreneurial entity. Each option has its own merits and considerations. If you have any questions or need personalized guidance, feel free to reach out to us. We’re here to help you make the right choice for your business. Contact us today to explore the possibilities and embark on your entrepreneurial journey with confidence!
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