The Private Limited Company is one of the most preferred business legal forms by growing Indian startups. A private limited company can fulfill the requirement of raising funds from private investors easily, attract less tax and is a separate legal entity with perpetual succession which is restricted to other business types.
Here are salient features of a private limited company:
Separation of Management & Shareholders
Management & shareholders are separated. A shareholder can invest the fund in fruitful business without managing & Management can operate their business without frequent interruption of investors.
Separate Legal Entity
A company is a Separate legal entity from its Owners and Management in the eyes of law.
A business of the Company will not affect if there is any change in the ownership of the company.
Easy Equity Funding
Startups businesses can easily raise funds from investors on an equity basis.
Every Pvt Ltd Company enjoys for recently announced start-up tax exemption, if meets eligibility criteria.
A Public Limited Company is a form of company that is registered under the Companies Act with minimum capital requirements of INR 5 lakhs and minimum 7 members. There is no bar at the maximum number of members in a public limited company.
Here are some key features due to which people opt for incorporating a Public Limited Company:
Power to transfer shares
A public ltd company can transfer shares to public and raise funds from public
One of the best advantage of public ltd company is that there is no limit on number of members in the company
Despite having characteristic of unlimited members the liability of all the directors in Public limited company is limited to the extent of stake they hold in the company.
Working of a public ltd company is more transparent because it separates its management from its ownership.
A Public ltd Company can gain, possess, and enjoy its property in its own name. No shareholder can claim upon the property.
OPC is a new concept in India and that is mostly trending among the community of young startup aspirants and freelancers who want to do a business at their own terms.
OPC can be proved as a best choice if you believe in quick business decision with no interruption or if you want to present your sole business professionally in front of your clients.
Here are a benefits of an OPC:
OPC is sole proprietorship business with limited liability features.
The key feature of OPC is One Person Company managed by a single owner.
Separate Legal Entity
OPC is a separate legal entity from his/her owner in the eyes of law.
OPC owner’s equity cannot be transferred freely to others.
OPC requires less compliances as compare to private & public limited company.
Stakeholding shall be easily transfer to nominee in case of shareholder deceased.
The partnership is a business relationship between 2 or more persons who have agreed to share the profits or loss of a business carried on by all or any of them acting for all. It is one of the quickest ways to form a legal entity where a group of 2 or more can do a business.
Here are key features of Partnership firm:
Partnership firm can be easily & quickly registered in comparison to other form of business.
Easy on Pocket
As comparison to other business form, cost of registering partnership firm is very low.
More Tax Saving as compare to sole proprietor business form.
Sharing of Risk
Individuals having same business goal can form and share risk & rewards.
Compliances & Disclosure
Least compliance & disclosure required as compare to other business form.
A Limited Liability Partnership Firm is a better version of general partnership firm carrying additional advantageous features like protection of business name, partners having limited liability shield, business listing on registrar of companies, recognition under Startup India Standup India scheme etc. LLP represents the business legal entity more professionally among your buyers as compared to normal partnership firm.
LLP has perpetual succession and contains salient features of Company and Partnership Firm:
Formation & Cost
It is easy to form LLP and registration cost is low in comparison to company formation.
Compliance & Disclosure
LLP requires less disclosure and compliance requirement is less as compare to other entities.
No mandatory requirement of statutory audit upto a certain limit i.e. Turnover or Contribution.
No income tax chargeable on profit distribution in partner’s hand.
Sole Proprietorship is the simplest form of business owned & operated by single entrepreneur and with minimum capital. It should be noted that Sole Proprietorship is the easiest and quickest business form to kickstart your business if you have limited funds and resources. Besides, it is the most feasible form of business if you want to execute your business plan with least legal compliances and minimum operational outlay.
Here are some benefits of Sole Proprietorship business:
Sole Proprietorship is the easiest form of business entity in the terms of procedure of establishment.
The cost involved in the formation of a sole proprietary firm is very less as compared to other forms of business.
As compared to other business forms, there are fewer legal compliances with respect to incorporation, operation and taxation.
As Sole Proprietor is the single owner of his business, he surely has independent control over his operations.
This is the only form of business entity that can be promoted by a single individual.
No corporate tax liability
As per the direct tax laws of India, the sole proprietary entities are not liable to pay flat corporate profit tax, unlike other business forms.