Register a Company
There are 6 different types of Business entities that start-ups
and MSMEs can register as

There is no separate law governing sole proprietorship firms. A Sole Proprietorship is a Business registered in the name of an individual wherein:

  • The Proprietor is responsible for functioning of the entire business, including Funding, incurring losses, and taking profits.
  • The liabilities and risks of the Business lay entirely with the individual, putting the assets of the individual at risk.
  • Small Businesses involved in Trading – Retail and Wholesale, and the manufacturing of spare parts, owned by a single Individual are recommended to incorporate as a Sole Proprietorship Firm.
  • This is similar to a Sole Proprietorship Firm, except that more than one person is involved in the running of the Business, the Funding, incurring losses, and dividing profits.
  • Partnership is “the relation between persons who have agreed to share the profits of the Business carried on by all or any one of them acting for all”.
  • It is governed by the Indian Partnership Act 1932. The partnership gets terminated by death or insolvency of any one or more partner/s.
  • Small Businesses involved in Trading - Retail and Wholesale, and the manufacturing of spare parts, owned by more than one person are recommended to incorporate as a Partnership Firm.
  • In an LLP (Limited Liability Partnership) Company, the liability of at least one member is unlimited, whereas all the other members have limited liability, limited to the extent of their contribution in the LLP.
  • Unlike general partnership, a Limited Liability Partnership does not get terminated by the death or insolvency of the limited partners. It is governed by Limited Liability Partnership Act of 2008.
  • An LLP must have a minimum paid-up capital of Rs. 5,000.00
  • It is recommended for small Businesses, involved across various Industries.

A Private Limited Company has the following features:

  • Restricts the right of the shareholders to transfer their shares.
  • Has a minimum of 2 and a maximum of 50 members.
  • Does not invite the public to subscribe to its share capital.
  • Must have a minimum paid-up capital of Rs. 1 lakh or such a higher amount which may be prescribed from time to time.

A Public Limited Company has the following characteristics:

  • It allows the shareholders to transfer their shares.
  • Has a minimum of 7 members, and for the maximum there is no limit.
  • It invites the general public to subscribe to its shares.
  • Must have a minimum paid-up capital of Rs 5 lakh or such a higher amount as may be prescribed from time to time.
  • One Person Company (OPC) is defined in Sub-Section 62 of Section 2 of The Companies Act, 2013, which reads as 'One Person Company means a Company which has only one member'.
  • An OPC is incorporated as a Private Limited Company, where there is only one member and prohibition in regard to invitation to the public for subscription of the securities of the Company.
  • The paid-up Capital and other characteristics are similar to a Private Limited Company.
  • Small Business, involved in Manufacturing and Service Sector Industries, owned and run by a single individual are recommended to incorporate as an OPC.

Choosing the type of Business Entity

Criteria
Most Beneficial
Least Beneficial
Cost of formation
Sole Proprietorship
Pvt Ltd and Public Ltd
Ease of formation
Sole Proprietorship
Pvt Ltd and Public Ltd
Transfer of Ownership
Public Ltd
Partnership
Continuity
Pvt Ltd and Public Ltd
Sole Proprietorship
Regulations
Sole Proprietorship
Pvt Ltd and Public Ltd
Flexibility
Sole Proprietorship
Pvt Ltd and Public Ltd
Availability of capital
Pvt Ltd and Public Ltd
Sole Proprietorship
Liability
LLP, Pvt Ltd and Public Ltd
Sole Proprietorship
Do you want more help in registering your company?

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