STARTING A BUSINESS IN INDIA
Start A Business Structure That Suits Your Requirements
Wondering as to what kind of entity to be registered? Here is an idea of various entity types, its nature, advantages & disadvantages which are to be considered before you take the decision.
Selecting the type of business entity is the first and foremost decision taken by an entrepreneur while starting a new business. With the advent of various enactments and laws, more choices of business entities are now available for the entrepreneurs to choose. Therefore, it is important for the Entrepreneur or Promoter to understand the pros and cons of each of the business entity type and then choose the right one among them.
In this upcoming article, we compare the types of entities viz. Proprietorship vs Partnership vs LLP vs Private Limited Company vs One Person Company in order to understand their structure, pros, and cons and then we can decide accordingly as to the type of entity which suits our requirements.
| Particulars | Proprietorship Firm | Partnership Firm | Limited Liability Partnership (LLP) | Private Limited Company | One Person Company (OPC) |
| Applicable Law | No Specified Act | Indian Partnership Act, 1932 | Limited Liability Partnership Act, 2008 | Companies Act, 2013 | Companies Act, 2013 |
| Registration | Not Mandatory | Not Mandatory | Mandatory | Mandatory | Mandatory |
| Number of owners |
Only 1 member |
Min- 2 Max-50 |
Min- 2 Max-Unlimited |
Only 1 |
Min-2 Max-200 |
| Separate Legal Entity | No | No | Yes | Yes | Yes |
| Statutory Audit | Not Mandatory | Not Mandatory | Based on Applicability | Mandatory | Mandatory |
| Ownership Transferability | No | Yes (Restricted) | Yes | Yes | Yes (Restricted) |
| Foreign Ownership | Not allowed | Allowed | Allowed | Allowed | Not Allowed |
| Compliance Requirement | Low | Low | Moderate | High | High |
| Perpetual Existence | No | No | Yes | Yes | Yes |
| Taxability | Low | High | High | Moderate | Moderate |
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