If you plan to set up your business, the first decision to be taken by you is the type of incorporation ideal for your business. Below are the various types of Company incorporations available-
1. SOLE PROPRIETORSHIP
The most ideal form of business organisation. In this type of incorporation, there is no difference between individual and the firm. The business assets are to be considered that of the owner. All registrations in relation to business are to be made in the name of the owner.
Income of the proprietor and the firm is to be considered as one for taxation purpose.
2. PARTNERSHIP UNDER THE INDIAN PARTNERSHIP ACT, 1932
In this type of business incorporation, the firm is identified distinct from that of owners. Minimum number of partner must be two and maximum 20. The partners to the firm enter into a partnership deed where contribution to the firm, duties, etc. is decided. The registration of the partnership firm is optional. However, in case of registration, the same has to be done before the local sub-registrar office.
All statutory registrations are to be done in the name of partnership firm. In respect to taxation, income-tax returns have to be filed separately i.e. separately for business transactions and partners of the firm respectively.
3. ONE PERSON COMPANY (OPC) UNDER THE COMPANIES ACT, 2013
One Person Company requires one Director for its formation. It is a one shareholder corporate entity. The legal and financial liability is limited only the Company and not to the Director.
This entity requires a minimum authorised capital of Rs. 1,00,000. This type of incorporation is suitable for scaling business and companies seeking investment.
4.LIMITED LIABILITY PARTNERSHIP (LLP) UNDER THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
Limited Liability Partnership is a mixture of a private limited company and a partnership firm. LLP is a separate legal entity which limits liability of the partners to their contribution to the Company. Two designated partners are required for its incorporation.
The entity is required to maitain accounts and annual returns with the Registrar of Companies (ROC).
All statutory registrations including taxation has to be in the name of LLP. Income tax returns have to be filed separately for the business and Directors respectively.
5. PRIVATE LIMITED COMPANY UNDER THE COMPANIES ACT, 2013
The most commonly used form of business organisation by startups and companies. It is known for its characteristic of being distinct legal entity. For incorporation, two Directors and two Shareholders are required. They are not personally liable for the acts of the Company but can be penalised or imprisoned in official capacity. The minimum authorised capital must be Rs. 1,00,000.
All statutory registrations and taxation must be in the name of the Company.
For advice on incorporation and registration, please contact: