The word’ Business’ means taking part in activities that will give them freedom in the way they do things in an innovative way.
Ideas will sprout in your mind, to begin with, different business ideas and then idea validation, but you need to register your company as a separate legal entity before starting a business.
Different types of Business registration In India.
- Sole Proprietorship
- Partnership Firms
- One Person Company (OPC)
- Public Limited Company
- Private Limited Company
- Limited Liability Partnership (LLP)
- Section 8 Company
These are companies that are run by a single person or, to say, a single trader. A sole trader and his / her company are not legally distinct. These models do not require any type of business registration. He/she manages the whole business and can work under him/her to employ people.
The Indian Partnership Act, 1932 governs partnership businesses in India. A partnership is a form of business in which two or more people share ownership as well as the company’s management responsibility. Partnership business with or without registration can be performed.
You need to create a legal partnership agreement that will define the roles and responsibilities of each partner in the firm to register your partnership firm.
The partnership agreement will describe the partners ‘ profit-sharing ratio. The partners must be personally responsible for it in the event of losses. Partners ‘ personal assets can be used to compensate for any losses incurred.
If the partnership deed is not registered, however, the partners may not be able to enjoy the benefits that a registered partnership company enjoys.
One Person Company (OPC)
One Person Company is a hybrid form of the business with Sole-Proprietorship and Company governed by the Companies Act, 2013. This model is a stepping stone for entrepreneurs who are able to own and manage the business as the company’s sole member and manager.
As the name suggests, unlike a private limited company or a limited liability partnership, there can be only one member that is the biggest advantage.
One Person Company (OPC) is its member’s separate legal entity. The model gives the owner separately limited liability coverage and also provides an advantage of business continuity.
Related Post: Top 10 Profitable Niche Product Ideas for 2020
Public Limited Company
Simply put, the public limited company is a company that is not a private limited company. They are also registered under the 2013 Law on Companies. Each of these companies should have at least seven members and three directors. The transfer of shares in a Public Limited Company is not restricted.
Private Limited Company
Private Limited Company is the most sophisticated type of business in India and this clan belongs to almost every company in India. They are licensed under the 2013 Act on Companies. The business assets are separated from personal assets under this company registration structure. Each company’s name must end with the words Pvt. Ltd.
A Private Limited Company typically has 3 forms of equity clause:
1. Company Limited by Shares–Members ‘ liability is limited to the number of unpaid shares held by members.
2. Guarantee-limited company–A guarantee-limited company typically does not have a share capital or investors, but rather representatives serving as guarantors. The guarantors send a nominal amount to the undertaking as negotiated in the case of the company’s winding-up.
3. Unlimited company–The members are personally liable to an unspecified extent to the company under this.
For a private company, the maximum number of members is 200 with at least 2. The company should also have at least 2 managers.
Related Post: How Important is an Accountant for Business?
Limited Liability Partnership (LLP)
The Limited Liability Partnership Act, 2008 introduced this concept for the first time. An LLP is a hybrid organization that has both the features of a partner company and a corporation. Partners ‘ personal assets are not jeopardized as each partner’s total liability is determined by the entity’s share capital.
It is a preferred business model for shareholders as they have a greater reputation than partnership companies and sole proprietorship.
Section 8 Company
Under the Companies Act, 2013, the Non-Profit Organization (NPO) is called Sec 8 Corporation. Section 8 Company is a limited liability company made up of objects of charity. The government grants a Section 8 Company the right to drop the terms “private limited” or “limited” as a suffix from their names under the following conditions:
a) Section 8 Company must be formed for charitable objects (art, science, education, sports, social welfare, research, charity, religion, environment).
b) Revenue and gains should be attributed to those items and
c) Section 8 Corporation should not pay its employees any dividends.
Therefore, these are the various forms of business registration that enable you to incorporate/register your company.
When thinking about starting a business, you should not only consider the revenue model or your business area for your business, but also the different heads under which you should register your business as a separate legal entity.
Therefore, choose from the above list.
Now you know all these myths and how market research can be useful for every business and that too in an endless way. To make your process easier and valid you can use Howkya– market research tool. It gives access to your target audience and the users are verified Linkedin people. You can get instant answers from experts from your interested field. Stay on top of the market trends with Howkya.