Generally a person has many business ideas but they are confused, how to start it and which form of business will be suitable for them.
Hence, here we are covering the available forms of business which one can opt to start their business depending on different factors.
It is very simplest form of business. Its formation is very easy and less capital is required for this. This is owned, controlled and operated by a single person. All profits belong only to the owner (i.e. sole proprietor).
Have you started your business as a sole proprietorship and your business is running good and now you want to expand your business, but you don’t have enough money/resources to expand it then what should you do? Here are some other forms of businesses that one can undertake.
Partnership form of business is an arrangement by two or more persons to manage, to control and to share the profits of a business. At least 2 persons are required to form a partnership form of business. It can be created through an agreement or contract. It is governed by Indian Partnership Act, 1932.
If you are in a partnership form of business and you want to save yourself from unlimited liability arising from the acts of other partner’s then one can go other option given below:
Limited liability partnership is another way to do business, created by two or more persons. It is a separate entity from the partners who constitute it. A partner is not liable for the acts of another partner. Liabilities of partners are limited to their share of profit. It is governed by Limited Liability Partnership Act, 2008.
Are you running your business as a LLP and your LLP is working very well and you want to spread your business at very large stage/international level then another option is also given below:
Company form of business is created by law for lawful purpose. In this type of business, all limitations of Sole Proprietor, Limited Liability Partnership and Partnership Firm are removed (e.g. One person also can create a company i.e. OPC). Existence of a company is not affected even if all the directors or members die or become insolvent.
To create a company, at least 2 persons (in case of Private Company) and at least 3 persons (in case of Public Company) are required. If a single person wants to take all the benefits of a company then one can go for other option given below which is called as One Person Company (OPC).
Only one person is required to incorporate it. OPC provides all benefits of a company with less legal compliances. Besides these benefits Government also provides other benefits only to an OPC.
Above, we have discussed some forms of business which are used to do business activities. Every form of business has its advantage as well as disadvantage. Hence every person can do business by adopting any of the business form as discussed above according to their need and resources.
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TEAM SIGMA LEGAL