Whenever we plan to start our own startup, one of the biggest confusion or challenges which we come across is; what type of business organization can you register your firm in?
If you are also searching for the answer to this question then you are in the right place.
After the launch of Atama Nirbhar Bharat; Startup culture is booming in our country. We all are excited and enthusiastic to start our own company and to try that special idea which we know will work definitely.
Hence; to support you throughout the process we are here but first, you need to understand what exactly are the different types of organizations as per the corporate law of our country.
We will talk about the two important topics in this blog:
What are the types of business organizations?
How to select the right business organization?
If you are someone who doesn’t like to read much then we have a video for you. Watch the video to understand the entire concept smoothly:
What are the types of business organizations in India:
A single person will handle the entire business process; management, operations, decision making, profit, and loss. This type of business is easy and quick to set up and it requires a less financial investment to register. The single owner of the company will be liable for everything and it gives creditors the authority to go after the personal assets of the owner.
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A company registration process requires a minimum of 2 partners and a maximum of 100. The partners of the firm can decide the terms of the partnership like a share of profit and loss. The company will have its own identity; a PAN card will be generated on the name of the company.
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A business firm that has its own legal identity other than its owners. The ownership of the company mostly decided by the shares a person holds in the company. The company will have its owners along with a board of directors.
There are 2 types of corporate companies:
Private Limited Company
Public Limited Company
Let’s have a look at each one of them.
Private Limited Company:
A business entity that has a small group of people as its owners. A private limited company will be registered for the pre-defined objects. The company will have owners who are called shareholders. A company which has the aspiration of higher growth opts for private limited registration.
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Public Limited Company:
In very simple terms; a public limited company can be defined as a separate legal entity that trades its shares on the stock exchange. The stocks are then available for the public to buy. A public limited company has to provide its financial position and statistics to the public and maintain transparency with the shareholders.
We specialize in Public Limited Company Registration.
4. OPC (One Person Company)
An OPC is a hybrid of proprietorship and Corporation. If a person wants to be the sole owner of the company but needs corporate structure then OPC is the best option. An OPC has its own legal identity hence the owner will not be liable to any creditors.
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5. Limited Liability Partners (LLP)
In LLP; The liability of each partner is limited to the amount they have invested in the business. LLPs are most popularly adopted by professional businesses like wealth managers, law firms, and accounting firms.
Want to register your LLP? We are here for you.
How to select the right business organization?
Now that you have a basic understanding of types of business organizations; it’s time to select the right one for you. It is very important to decide on the right organization as the future of your business depends on it.
Consider the following factors before finalizing your business organization:
The requirements of the paperwork along with the costs and expenditure
The first thing to check is the requirements of the paperwork. Take a list of all the documents required for the registration and make sure you have all those available.
Each business organization has a different taxation process. It doesn’t matter if your company will be small or large you will be required to pay the taxes as per the laws of that organization type.
Transferability of the business in the future
We always want our kids to take over our company. It is important to make sure that the organization type you are selecting will not die with you. Clear the transferability clauses in advance.
We can never think about losing our hard-earned money or property to a failed business plan. So make sure that you are clear of the liabilities of your company and the company has a separate legal identity.
These were just a few factors which we mentioned here, there are a lot of other factors which matter a lot when it comes to selecting the right business organization for your company.
Over To You!!
If you are still thinking about the type of business organizations and which one is the most suitable for your company then we are here for your assistance. Get in touch with us today and we will assist you throughout the process.
Corporate Hub has the perfect team of experienced professionals who can provide a 360-degree solution to your company. Contact us today for any query and we will be happy to help!