Thursday, 26 November 2015

Options for setting up business in India and the due process

While starting the business, an entrepreneur has many options on the choice of business entity that he should start with and larger the number of options larger the chances of confusion. In India, you can register a  Pvt. Ltd. Company, Limited Liability Partnership, One Person Company, or Partnership firm for purpose of carrying your business. This decision of selecting the right entity is very crucial and depends upon certain factors like liability, nature of business, number of owners, scale of business, taxation, estimated tenure of the business, future plans, closing etc.

A brief of entities as mentioned aforesaid is given below:


1. Company is the oldest & renowned business Structure in India.

There are 2 types of company

Private Limited Company in India:
It is a closely held company with minimum requirement of at least 2 shareholders and maximum 200 shareholders, 2 Directors, and minimum paid up share capital of Rs 1,00,000.

Public Limited Company: A which is not a Private Limited Company in known as Public company. There should be at least 3 Directors and 7 shareholders with a minimum paid-up capital of Rs 5,00,000 . There is no limitation on the maximum number of shares and therefore such company can offer its shares to the  .. 

3. The entire capital of the company is divided into small units known as shares. Each member hold shares in the company are called as shareholders and the ownership is defined by number of shares in the total capital held by any shareholder

 A company is run by Board of Directors, consisting of directors, which are appointed by the shareholders. Shareholders can themselves become director or they can also appoint any other individual as shareholder. Directors take all the decision related to company

5. Company is treated as an artificial person so that all assets and liabilities are owned by it and not its shareholders.
6. The liability of the shareholders is only limited to the capital to be paid on their shares

7. Registration 

a. Registering authority is Registrar of Companies
b. Minimum registration cost for private company is Rs 5200 and for public , it is Rs 24600
c. Time to Register : 15-20 working day

One Person Company

1. The concept of One Person Company (OPC) has been introduced in India in 2014. A company which has only one shareholder is called as One Person Company.

2. This is a new concept which has come up by the enactment of Companies Act, 2013.

3. This form of business entity is a Private Limited (OPC) in nature.

4. The shareholder must be the Citizen  of India

 OPC shall have one shareholder, director and minimum paid capital of Rs 1,00,000

6. The shareholder of the OPC has to nominate a nominee who will the shareholder in case of death of the main shareholder or he is unable to enter into any contract.

7. As compared to normal company , OPC have lesser compliances

8. The remaining features of a OPC are similar to the company

9. Registration 

a. Registering authority is Registrar of Companies
b. Minimum registration cost is Rs 4800
c. Time to Register : 15-20 working day

LimitedLiability Partnership (LLP)

1. After company, the world's most recognized form of business i.e. Limited Liability Partnership.

2. A Limited Liability Partnership, popularly known as LLP is a hybrid form of company and partnership. It takes in the advantages of both but leaves disadvantages out.

3. A LLP should have minimum 2 partners and there is no minimum requirement of capital. So you can start with Rs 100 also.

4. In a LLP one partner is not responsible or liable for another partner's misconduct or negligence, this is an important difference from that of an unlimited partnership.

5. Registration 
5. Registration 

a. Registering authority is Registrar of LLP
​b. Minimum registration cost is Rs 1750
c. Time to Register : 10-15 working days

For tax and other financial info visit link Tax consultancy in Mumbai

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