Each unregistered or registered business works below a form and the business is working under what kind of form makes a huge effect on the profits of the business and business as well.
Selecting a business form is similar to selecting a car, where various models are available. But you need to pick one which is best for you.
Here we are discussing some type of business which a startup wants to incorporate.
Partnership is a type of organization of business where two or more partners operate and handled the business. All the partners are personally and equally liable for the business debts. It is very simple to form a partnership. There is no need of minimum capital in the partnership. To incorporate a partnership, only two partners are required.
Up to some extent, partnership is similar to the proprietorship. The main difference is that partnership requires a minimum of two partners. Two or more partners can begin a business. A partnership can also be registered. A partnership can be easily transformed as a private company.
LLP (Limited Liability Partnership)
A limited liability partnership or LLP is a distinct legal entity and it can be incorporated easily. A minimum of two persons are required to form an LLP. Its main aim is to make profit. It can be easily formed in a country like India.
The benefits of traditional partnership and private limited company are enjoyed by an LLP. Due to enhanced regulations and rules in the private limited company, it is better for a startup to form an LLP, if in the future, they do not want to increase investments.
A sole proprietorship is a simple form of business below which a person can manage a business. A sole proprietorship is not described as a legal entity. It is known as a person who is liable personally for all the debts and business is owned by him or her.
In the India, after the beginning of the One-Person Company concept, it is not beneficial to form sole proprietorship.
Private Limited Company
A private limited company is a highly popular business form. A minimum of two persons are required to form a private company. It is an ultimate business form. The reason is the private limited company owners can perform any kind of transactions of the business as per their liking.
OPC (one-person company)
OPC is considered as a modified form of sole proprietorship. To form an OPC, only one person is needed. Benefits available to a limited liability company or LLP are enjoyed by the OPC.
Public Limited Company
In the India, a public limited company is a type of highly powerful business form and it is a very big company. If you are a startup and want to expand your business, then incorporating a public limited company is an ideal option for you.
This type of company is registered under the companies act 1980. A minimum of seven members are required to form a public limited company. Also, there is no limit on the maximum number of members.