Starting a Company? Select which type suits your business.

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Many of us who wish to incoporate our business tend to defer it due to fuzzy world of regulations, the never ending compliance requirements tend to make us step back. There are middlemens and agents who portray obscure regulations to escalate the billing and uninformed clients become the guinea pigs.

Ministry of Corporate Affairs has indeed eased the procedure for incorporating in India and every information you need is easily available.

First thing first, decide what type of Company you need:

  1. One Person Company – Enables an entrepreneur to start and manage a limited liability entity. OPC is formed to support single entrepreneurs and help them in running business with limited compliance requirement. (Procedure for starting OPC ) Following are its advantages:
    1. Less Regulations
    2. Legal identity for business
    3. Limited Liability
  2. Private Limited company -Private limited companies are the companies where minimum number of members is two and maximum 200. A private limited company has flexibility, greater capital combination of different and diversified ability, limited liability, greater stability and legal entity. In the grand of priveleges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is the subsidiary to the other public company.Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Borrowing Capacity
    4. Limited Liability
    5. Owning property
  3. Public Limited Company –  A limited company grants limited liability to its owners and management. They have a right to raise money from public for operations of the business and minimum number of members to start the business is  7 and no maximum limit. It has all the benefits of private limited company and ability to raise high funds, but has to follow many regulations and compliance requirements. Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Borrowing Capacity
    4. Limited Liability
    5. Owning property
    6. Ease of raising high funds
  4. Limited Liablity Partnership – It has been introduced in India by Limited Liabilities Act, 2008. The basic premise of the Act is to provide a form of business organisation that it is simple to maintain while at the same time providing limited liability to the owners. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence or negligence of the LLP’s employees or other agents.  Following are its advantages:
    1. Separate legal entity
    2. Uninterrupted Existence
    3. Audit Not required
    4. Limited Liability
    5. Owning property

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