There has always been a confusion among people when they want to start a business. I should go for Proprietorship, Partnership, LLP or Company. You definitely ask your friends, family members and co colleagues. You are very serious about your new venture, you have already validated your idea, done the right market research, but selection of a wrong structure for your business can definitely create lot of problems for you.
Here I give you’re the right structure for the right kind of Business, along with the tax implications
If you are the only person running the business, no partner then you can always go with a proprietorship firm.
To understand the tax structure, refer the link
Partnership firm is formed between two or more person. Maximum partners in partnership firm can be 20.
Limited Liability Partnership:
LLP Act came into existence in 2008. It is the most preferred form of entity to go for in the case of services if you have two or more partners. It is always preferred over partnership as it has a legal existence in the eyes of law.
Private Limited Company:
If you are looking for investor funding or cracking corporate clients and brands, Private limited company will always have an advantage over any other form of entity. Except compliances, it has all the benefits
One Person Company
This is a new initiative started by a Government, One-person Company. One single person can also start his own Private Limited Company i.e he can be the only shareholder. This is preferred by business owners who were running the business initially through proprietorship. The only difference between private Limited company and One Company is
It would be named as below:
XYZ Services Private Limited (In the case of Private limited company)
XYZ Services OPC Private Limited (In the case of One-person company)
Section 8 Company
This is the legal structure given for trust. Trust can also be formed in the form of a company which is called Section 8 company.
Once you have selected the right structure as per your needs, approach a consultant and go for it. If you have difficulty in selecting the right structure, a CA or a consultant can always help you.
Once you form a company, apply for the necessary business license like IEC if you are into import export, MSME License, GST Registration as per your turnover criteria.
Then consult your CA and also maintain the accounts from day one so that you have the details of profits/loss and finance from day one of your business. Accounts helps you in taking the business decisions. A right and real time accounts helps you in projections and funding.
Look out for a team as per your requirement. Always prefer a CRM Software to keep a track of all the sales leads.
It is not just compliance which is important for your business. Marketing plays a key role. Find out the effective marketing strategy for the right business. Whether it is social media presence, offline marketing, blogging, inbound marketing etc. Ensure steps are taken and plan your marketing well.
We hope that you have got the information on how to start the business. Discuss it with your friends, validate your idea, do right market research, gets your team and bang on. Go for it. Let us know if you have any query.