TYPES OF ENTITIES THAT CAN BE FORMED BY STARTUPS
- PRIVATE LIMITED COMPANY
Start-ups and growing companies pick this popular business structure because it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to attract top talent. As these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA), they tend to be viewed with more credibility than an LLP or General Partnership.
- LIMITED LIABILITY PARTNERSHIP
A relatively cheaper approach to incorporate as compared to a Private Limited Company and requires fewer compliances; its main improvement over General Partnership is that it limits the liabilities of its partners to their contributions to the business and offers each partner protection from negligence, misdeeds or incompetence of the other partners.
- GENERAL PARTNERSHIP
A General Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in the Partnership Deed. This structure is thought to have lost its relevance since the introduction of the LLP because its partners have unlimited liability, which means they are personally liable for the debts of the business. However, low costs, ease of setting up and minimal compliance requirement make it a viable option for some, such as home businesses that are unlikely to take on any debt. Registration is optional in the case of General Partnerships.
- SOLE PROPRIETORSHIP
A sole proprietorship is a business that is owned and managed by a single person. You could have one up and running within 10 days, which makes it very popular among the unorganised sector, particularly small traders and merchants. There is no such thing as registration; proprietorships are recognised by other registrations, such as a service or sales tax registration.
- ONE PERSON COMPANY
The constitution of a One Person Company (OPC) was recently introduced as a strong improvement over sole proprietorship. It gives a single promoter full control over the company while limiting his/her liability to contributions to the business. This person will be the only director and shareholder (there is a nominee director, but with no power until the original director is incapable of entering into contract). Hence, there is no scope of raising equity funding or offering employee stock options.
Share:
More Posts
BUSINESS AUTOMATION
INTRODUCTION Business automation refers to the use of technology to automate repetitive and time-consuming tasks in a business setting. This can include tasks such as
Audit: and its benefits for Businesses
Audit is the practice of conducting an official inspection of an organization’s accounts and activities generally by an independent body. The person who conducts an
Surrender PAN Card- Procedure
An individual or entity could have been issue with duplicate PAN cards due to an administrative error or if he applied multiple times and received a PAN card each time. As it is illegal to have more than one PAN card at a time, the duplicates have to be surrendered.
Surrendering a duplicate PAN card can be done both online as well as offline.
Important Update on Uploading of Form 15CA and 15CB on New Income Tax E-filing Portal
In the previous e-filing regime, the CA would separately upload 15CB. In the new e-filing regime, it is an integrated workflow. Taxpayer files 15CA and assigns to CA. The CA will then see in his worklist as 15CB pending with prefilled data. CA will fill 15CB and submit back to taxpayer. The taxpayer will then accept the 15CB, as prepared by the CA, in his worklist and download the same.