Types of Business Entities to Start in India
Presently, India is considered an emerging market with a lot of opportunities for investors. The diverse economy presents all sorts of business entities for doing business in the country. Here, there are five major business entities, which are trading in the entire country:
A sole proprietorship is a business that is owned and managed by a single person; it is also known as a one-man army. The liability of the sole proprietor is limited to the extent of capital contributed by him. As it is run by a single owner so, all the profit and loss is shared by that single person only. It is quite famous among the unorganized sector, mainly small traders and merchants. There is no such thing as registration; proprietorships are recognized by other registrations, such as a service or sales tax registration.
Partnership firm is initiated with 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. The minimum members to form a partnership are 2, and the maximum is 10. It is governed by the Indian Partnership Act 1932.
Limited Liability Companies
Limited Liability Companies provide limited liability to owners. It is a corporate body and has its own existence in the eyes of the law. The act of 2008 gives LLP the freedom to manage its own affairs. It is a cheaper approach to incorporate as compared to a Private Limited Company and requires less compliance.
Private Limited Company
Private Limited Company is the most popular business structure. It is defined as a voluntary association of not less than two and not more than 50 members. Under this business type, the liability is limited; the transfer of whose shares is limited and not allowed to invite the general public to subscribe to its shares.
Public Limited Company
A Public Limited Company is that company which is owned by the public or in which the public can subscribe. Here, there should be a minimum of 7 members, there is no upper limit.
One Person Company in India
One Person Company in India was started under the Companies Act, 2013. It supports entrepreneurs carrying on the business in the Sole-Proprietor form of business with a Corporate Framework.