Background
In today’s era, everyone is attempting to own their fortune by running their own business and accomplishing their dreams. On account of the Government’s initiative and its “Make in India” drive, various statutory rules of has been relaxed up for doing business in India and gives various chances to the new visionary to venture into new business. Government has relaxed up the laws as well as has reduced the compliances and has facilitated the procedure to establish the business.
In India, there are different forms of business, which an individual can select as per his needs, prerequisites and monetary limit with respect to accomplishing his/her dreams. In this manner, it is significant for an individual to comprehend the type of business accessible to him.
The different form of business can be categorised as follows:
1. Sole Proprietorship;
2. Partnership;
3. Societies;
4. Limited Liability Partnership {LLP}
5. Company:
a. One Person Company;
b. Private Limited Company
c. Public Limited Company
d. Producer Company
e. NGO
All the above models of organizations have its own benefits and disadvantages. It may happen that one type of business structure suits to an individual and probably won’t be appropriate to the next individual.
For instance a juice shop can be owned and run by a single individual who plays out all the exercises for example overseeing, financing, transportation and so forth alone, in this way, for such individual “Ownership” would be a superior type of business. Nonetheless, for established /set up business entities, it would not be feasible for a single individual to deal with the whole things alone so in that situation, proprietorship would not work. For reference to the business person, each type of business has been detailed below to assist business person with taking sane choice while choosing the form of business:
1. Sole Proprietorship
This is the most basic and simplest type of business. The sole Proprietor (Single Person) is the owner of the sole proprietorship business. There is no predetermined authorization to oversee this type of business or running of sole owners business. Sole Proprietor is exclusively answerable for all the demonstrations and agreements entered throughout business. He exclusively appreciates the benefits of the business of proprietorship firm and if there are some losses which arise during the subsistence of the business, then he shall be sole responsible to bear the same. In case of proprietorship, there are a few limitations in sole ownership form, as the bank doesn’t have a sense of security and don’t want to give advance to the proprietor and there is no concept of funding, unlike in private limited company, due to lack of specific governing law.
Features of Sole Proprietorship:
a. It is NOT a separate legal entity unlike, LLP or Company;
b. Proprietor has boundless risk;
c. Proprietor is actually obligated for all the obligations and misfortunes of the business;
d. Proprietor can sue or be sued in its own name.
2.Partnership
In case of Partnership firm, at least 2 person enter into a contract to venture into a business so as to share benefits earned and will be personally liable for the losses, if any, incurred. All decisions are duly taken with common assent of the business Partners. The Partnership is administered by the Partnership Act, 1932 and registration of the partnership firm is at the sole discretion of the partner of the firm as registration of the same is optional as per the provision of the Partnership Act, 1932. In any case, a registered partnership firm can make legitimate move against the firm, its partners or third party. Though it is optional to get the firm registered under Act, but it is always suggested to have the firm registered to avail the full benefits as available under the Act. It is simple and modest type of business to build up and oversee unlike limited liability partnership or Company, where registration is mandatory.
The individual having control and stake are known as Partner of the Partnership Firm and are answerable for sharing the misfortunes and benefits of the firm in a concurred proportion (for example benefit sharing proportion). The said partners are personally held liable for the debt of the Partnership firm.
Partnership firm can be framed by drafting a Partnership Deed and business can be quickly begun dependent upon related sector conditions and neighborhood laws and so on. It very well may be registered firm or un-enlisted Firm.
Features:
a. There ought to be in any event 2 people to frame the Partnership Firm
b. Every partner act as an agent of another partner
c. Business of Partnership firm can be carried on by all the accomplices or any of them representing all
d. Every Partner contributes his capital in the concurred proportion
f. Liability of each accomplice is boundless
g. Partnership Firm can be enrolled firm or un-enrolled firm under the Partnership Act, 1932
3.Societies
Society is an association of individual which is framed for advancing workmanship, noble cause, research, religion, business or some other valuable reason. The society registration Act, 1860 was passed for the registration of society so as to give them the status of a corporation or a Legal person. The Societies are shaped to serve a specific peoples or network. This sort of business acquires benefits to support the general public. Along these lines the individuals choose their delegate, who will have the legally binding power to work together for the welfare of the society. The Societies are represented by the Societies Registration Act, 1860.
Features:
a. Easy formation;
b. Limited Liability of individuals;
c. Perpetual existence;
d. Social administration
4.Limited Liability partnership (LLP)
In present days, individuals are inclined towards LLP Registration for doing business because of its exceptional and remarkable features. Its constitution is a blend of both form of business i.e. Partnership and Limited Company. Limited Liability Partnership (LLP) is a different legal substance. When all is said in general law, a LLP is viewed and considered as a body corporate. It is managed by the LLP Agreement entered into between the LLP Partners.
Features:
a. No necessity of least capital commitment;
b. Minimum two partners are required to frame a LLP;
c. No limitations on the maximum number of partners;
d. Partner’s risk is constrained to the degree of the concurred commitment in the LLP understanding;
e. Minimum yearly compliances unlike Company where compliances are much more as compare to Proprietorship, Partnership and LLP
5. Company
This type of business is most favored as they are registered as a separate legal entity. Accordingly, the individuals members and the Company are not the same and are not at risk for the act of the Company. It has perpetual succession. Members may come and members may go however the organization goes perpetually, it keeps on existing regardless of whether every one of its individuals bite the dust.
A. One Person Company
B. Private Limited Company
C. Public Limited Company
A. One Person Company: One person company is another sort of Private Company having a sole member and a nominee of the Sole member. All the choices and decisions are taken by the sole individual and is exclusively responsible for its act. After passing of member, the forces are moved in the possession of the Nominee. A One Person Company needs to make reference to “OPC” in its name.
Features:
a. Only a natural individual who is inhabitant in India and resident of India must be named as individual for One Person Company Registration.
b. Maximum turnover a One Person Company can make is Rs. 2 Crore. Additionally the maximum paid up share capital of Rs. 50 Lakh.
c. Only one investor/ shareholder is permitted in One Person Company.
d. It is a separate legal entity.
e. Minimum number of Director is one.
B. Private Limited Company: Private Ltd Company will have atleast 2 members and maximum 200. The individuals acting as shareholders designate their representative called as Director who will take care for the everyday administration. Their shares can’t be exchanged or traded on any stock trade for example BSE or NSE, nor offered to general public through Public Issue. Company Act, 2013 has conceded various points of interest and granted exemptions to the private limited company in order to facilitate the ease of doing business in India and reason of people opt this form of business due to its unique features like ease of grant of business loan, chances of getting funding from venture capitalised or private players.
Features:
a. Shareholders option to transfer shares is limited and restricted;
b. The number of investors/ Shareholders is restricted only upto 200;
c. An invitation to the people in general to buy the shares or debenture of the company is restricted;
d. Minimum numbers of directors required are Two (2).
C. Public Limited Company: Public Company will have least 7 members and no restriction for maximum number of members. The shares of a Public Ltd Company are openly transferable and the shareholders have simple options and easy process for sale of shares. Further shares of Public Limited Company by shares can likewise be exchanged and traded on stock trades like BSE and NSE after complying the procedure laid down under the respective statute and its shares can likewise be offered to open by means of Public Issue.
Features:
a. The liability of its individuals is constrained and limited only upto the value of their unpaid share, if any.
b. Its shares are openly and freely transferable
c. No limitation on increase of number of shareholders
d. Open invitation to the general public to subscribe for its shares is permitted
f. A Public Limited Company is required to have at least three directors
Thusly on the off chance that you need to be the Leader, pick the choice best appropriate to you. Since then just you will have the option to reach to your objective inside the specific timeframe.
Legal Delight 