FAQ

• A Sole Proprietorship is the best form of Entity to choose if you wish to undertake a small business for a short period of time. A Sole Proprietorship is the basic unit of a business structure, managed, controlled and owned by one person. Since, the registration and legal formalities of sole proprietorship are the most simplified ones, it is opted by small businesses working for limited time period.
• All the powers of ownership are in hand of that single person called Proprietor. 

• Every entity type has it pros and cons, because of its nature and impact of provision, laws and regulators. But the best option available for a single person to do a small business is OPC (One Person Company). It is a deemed private company, but the ownership is only in one hand with all the benefits of private company. 
• The concept of One Person Company (OPC) allows a single person to run a company limited by shares (as both shareholder and director) while a Sole Proprietorship can be run and owned by one individual and where there is no distinction between the owner and the business.

There are several options available for those who want to do business with two or more business partners: – 

1. Partnership: – A partnership (or general partnership) is a business owned jointly by two or more people. Setting up a partnership is more complex than setting up a sole proprietorship, but it’s still relatively easy and inexpensive. The cost varies according to size and complexity. It’s possible to form a simple partnership without the help of a lawyer or an accountant, though it’s usually a good idea to get professional advice. Professionals can help you identify and resolve issues that may later create disputes among partners.
2. LLP: – LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. It’s a separate legal entity and can continue its existence irrespective of changes in partners In LLP. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
3. Joint Ventures as Partnerships: – A joint venture is typically a partnership between different businesses formed for a specific purpose (like making a movie or building a structure) or for a specified time period.
4. Private or Public Limited Company (Under Companies Act, 2013): – Companies are a separate legal entity created by shareholders. Incorporating a business protects owners from being personally liable for the company’s debts or legal disputes.

There are various parameters which must be kept in mind before deciding as to what kind of Company you want to incorporate to ensure maximum gains and minimum loss and success. The parameters to decide the business structure of Company depend on a case-to-case basis and are not exhaustive in nature in regards to incorporation of a Company:

• The number of members you want in the Company;
• The nature of liability you wish to incur in the business;
• The profit sharing you want in the Company;
• Whether you desire to float shares to the general public;
• The nature and time period of business you wish to undertake;
• The compliances you can undertake;
• Urgency of registration;
• Need for transferability or heritability;

Are few examples of questions being asked by professional before finalisation of right type of entity for registration.