Business Start Ups
Starting a Business
AÂ sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one natural person. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss etc. Proprietorship’s are very easy to start and have very minimal regulatory compliance requirement for getting started. This is suitable for small business entities and don’t want to get involved in the compliance.
There is no mechanism provided by the Government of India for the registration or incorporation of a Proprietorship. Therefore, business licences will suffice the formation of proprietorship business. PAN card will continue in the name of Proprietor who is responsible for all filings.
A partnership is an arrangement where parties, known as partners , agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses etc.
Partnerships firms are relatively easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors.
There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm.
- One Person Company
One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. The difference between a sole proprietor and a One Person Company would be that OPC is registered under companies and have limited liability to the extent of Business Assets. The Image of Business entity will increase if they go with OPC.
- Limited Liability Partnership.
Limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of Partnership and companies. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from the traditional unlimited partnership under the Partnership.
LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents. The very much popular in professionals.
- Private Limited Company
Private Limited Companies are those types of companies where minimum number of members is two and maximum number is fifty. The sharing is governed by the percent shareholding by the person. Also one can sell its shareholding partly to mobilize the funds. The company can increase number of members by issuing shares to the investors. Business operations is controlled by the Board of Directors(BOD).
The Private Limited company has its bye laws in the for of Memorandum and Article of Association which is Bible for the organization business activities. The company law mandate to maintain minutes of BOD and Members. This is separate legal entity and very much popular in Indian Business.
- Public Limited Company
Public Limited Company is very much similar to Private Limited except with regard to minimum number of members and options to raise funds from general public through selling of shares and debt products. There are lot of compliances required to maintain a public limited company and not very much popular between small and medium sized.