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Business Registration


While starting a business, one of the important question an Entrepreneur face is what type of legal structure to give to business. This question marks its relevance as it decides the amount of taxes entity has to pay, personal liability of its owners, paperwork involved and ability to raise money.

Definitely, the initial focus of the business is to develop their product, reaching to the prospective customers, meet with investors and build up a team. However, it is equally important to register your business whenever you embark your journey as a Entrepreneur.

At Legit Counsel, we not only assist people for registering their entity, but also assure people choose the business structure which helps them in achieving their Goals and Objectives.

In the subsequent sections we have discussed some Business Structures.

Sole Proprietorship



Sole Proprietorship is the simplest form of business under which one can operate. It is a business entity where a single individual handles the entire business organization. He is sole recipient of all the profits and bearer of all losses. There is no separate law that governs sole proprietorship. It is very popular among unorganized sector, among small merchant and traders.

Features:
• No Separate Legal Entity.
• Easy to establish
• Unlimited Risk and Liability
• Not much Legal compliances

One Person Company



One Person Company concept was introduced in Companies Act, 2013 which is a combination of Sole Proprietorship and a company. It gives the sole owner advantage to register his business and enjoy limited liability. It can be formed with only 1 owner and minimum 1 director. It is suitable for micro business and persons who has entrepreneur skill and have high potential to begin their venture by permitting them to build a single person company.

Features:
• Limited Liability of shareholder
• There can be only one member
• Easier Compliances
• Nominee need to be appointed at registration of OPC
• No Minimum Paid up share Capital

Partnership



Partnership in India is governed under the Indian Partnership Act, 1932 and it is a relation between two or more person who come together to share profits and losses of business. The parties set up the goals and objectives, profit loss sharing and risk of each partner in the formal agreement known as "Partnership Deed". In India, Partnerships are widely prevalent because of its ease of formation and minimal regulatory compliance.

Features:
• Easy formation
• Combined talent, judgement and skills of partners
• Unlimited Liability of partners
• Restriction on transfer of share of partners
• No separate legal existence of Partnership Firm

Limited Liablity Partnership



Limited Liability Partnership (LLP) in India was introduced by way of Limited Liability Partnership Act, 2008. It is a corporate business structure which offers benefit of limited Liability to its partners and allows partners to arrange its internal structure like a traditional partnership. Hence, it regarded as hybrid entity.

LLP is one of the easiest types of business to incorporate and manage in India. With an easy incorporation process and simple compliance formalities, LLPs are preferred by professionals, small businesses.

Features:
• Separate legal entity
• Easy formation
• Limited Liability of Partners
• Less Restrictions and Compliance

Private Limited Company

A Private Limited Company is the most popular legal structure for business and allows outside funding. Since it has more amount of legal compliance to be filed with Registrar of Companies it has more credibility. It limits the liability of its shareholders and enables them to offer employee stock option to retain its talent.

Features:
• Limited Liability of shareholder
• Requires Greater compliances
• It is a separate Legal Entity
• Easy Transferability of shares

Public Limited Company



A Public Limited Company is a separate legal business entity which offers its shares to be traded on the stock exchange or over the counter market for the general public. To register public company, there should be minimum 7 shareholders and no cap on the maximum. Further, a minimum of 3 directors are required in a public company. A public company is very much similar to private company however just distinguished itself in number of shareholders, number of directors, share transferability and its stringent compliance requirement.

Features:
• Limited Liability of shareholder
• Stringent regulatory compliances
• It is a separate Legal Entity
• Easy Transferability of shares
• Continued existence