Incorporation refers to the process of legally forming a business entity. The common types of business structures in India that require incorporation are companies (private or public), partnership firms, proprietorships, and charitable trusts.
For the registration of business there are six types of legal entities as mentioned below. Choose the best legal entity for your business.
Requirements: Minimum two Person (directors) are required to start a Private Limited Company(Family members can also become the director in a company)
Benefits: Its easy for a Private Limited Company to raise the funds from banks, financial institutions, investor and VC Firms.
Suitable: If your vision is to raise the funds & growing startupand need trustworthiness among the clients then must go with the privatelimited. Remember it is a Real Company in India.
Reason to avoid: It is a company so setup costing is high and annualcompliance is more as compare to the other entities such as LLP,Partnership firms etc.
Requirements: Need Minimum two Person for the Registration (Evenyou can also include your any family member on the paperwork if you have no partners)
Advantages: Doing the Business with the limited liability and having features of private limited company in less costing.
Recommendation: If your budgets is less and want to enjoy the Limited Liability and features of private limited then LLP is the Best for your start up.
Reason to avoid: If you want raise the funds in future or next 12years then must choose private limited company instead of LLP.
Requirements: Need Minimum two Person for the Registration (Evenyou can also include your any family member on the paper work)
Advantages: Less Costing and Less Compliance for Testing your Ideas.
Recommendation: If your budget is less and want just test your ideas then you can register a partnership firm without the registrar of firm which is optional thing.
Reason to avoid: In Less Costing it’s not register with the Registrar of Firms so you cannot file case against any partner or any third party in the business, another thing it’s a simple firm and taxation is the same as LLP so if budget is not issue then choose LLP.
Requirements: Need Min 2 Person for the Registration as you or else you can include your any family member on the paper.
Advantages: It’s a best for the Family Business.
Recommendation: Whenever recommend for the Partnership Firm with the Registrar of Firms. Reason is Costing is nearby same as LLP then why not choose LLP which is the mixture of the Partnership Firm and Private Limited Company.
Reason to avoid: When LLP Gives you more advantages in same costing or taxation then why avoid the LLP instead of Partnership Firm with the Registrar of Firms.
Requirements: Need1 Person for the Registration as you or on the name of any family member if you are doing the job.
Advantage: Easy to Start with less costing and less compliance.
Recommendation: if you are testing your idea in the business, you can start from this and when you company is growing then simply converts into the private limited company.
Reason to avoid: It’s a simple firm and no limited liability and cannot raise the funds for your new start up.
Proprietorship firm registration depends on the nature of business i.e. Service Based Business and Product Based Business
Requirements: Need1 Person for the Registration as you or on the name of any family member if you are doing the job.
Advantage: No Control of another person in the Business or Company with Limited Liability.
Recommendation: if you need company legal status as single founder then go with the One Person Company or else ignore the One Person Company and Choose a Private limited company instead of One Person.
Reason to Avoid: We invest more but in future we cannot include a partner in the business so why not go with the private limited company just spending extra more INR because it’s a one-time investment for your start up
The Indian Trust Act of 1882 defines a Trust as an arrangement where the owner or can say trustor transfers the property to someone else that is known as the trustee for the benefit of another person who is the beneficiary along with a declaration that the trustee should hold the property for the beneficiaries of the Trust or a beneficiary.
The Indian Trust Act of 1882 defines a Trust as an arrangement where the owner or can say trustor transfers the property to someone else that is known as the trustee for the benefit of another person who is the beneficiary along with a declaration that the trustee should hold the property for the beneficiaries of the Trust or a beneficiary.
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