A proprietorship firm can be established and managed by a single person. Only one person runs the business, and it is ideal for small business owners with low investments. The entire control of the business will be with the sole proprietor, who can enjoy the profits, but he/she will also have to bear all the business losses.
Two or more persons enter into a partnership and establish a partnership firm. The partners of the firm equally share the profits derived from the business. They will also have to bear the losses of the firm. The partnership firm is regulated under the Partnership Act, 1932. It is ideal for small businesses run by two or more persons with low investment.
Recently introduced in the year 2013, an OPC is the best way to start a company if there exists only one promoter or owner. It enables a sole proprietor to carry on his work and still be part of the corporate framework. It is registered under the Companies Act, 2013. It is ideal for small businesses who want to raise capital.
An LLP is a separate legal entity where the liabilities of partners are only limited only to their agreed contribution. An LLP is established under the Limited Liability Act, 2008 with the Registrar of Companies (ROC). It has features of both the partnership firm and the company. It is ideal for businesses established by partners who want limited liability.
A PLC in the eyes of the law is regarded as a separate legal entity from its founders. The directors of the company look after the affairs of the company. The shareholders (stakeholders) invest in the company and are part owners. A PLC is registered under the Companies Act, 2013 with the ROC. It is ideal for medium to big businesses who wish to raise capital.
A Public Limited Company is a company established by seven or more members under the Companies Act, 2013. The directors are responsible for the affairs of the company. It has a separate legal existence and the liability of its members are limited to the shares they hold. It is ideal for medium to big businesses who wish to raise capital from the public.
You can choose the business structure that suits your business needs and accordingly register your business.
It is important to choose your business structure carefully as your Income Tax Returns will depend on it. While registering your enterprise, remember that each business structure has different levels of compliances that need to be met with. For example, a sole proprietor has to file only an income tax return. However, a company has to file an income tax return as well as annual returns with the Registrar of Companies.
A company’s books of accounts are to be mandatorily audited every year. Abiding by these legal compliances requires spending money on auditors, accountants and tax filing experts. Therefore, it is important to select the right business structure when thinking of company registration. An entrepreneur must have a clear idea of the kind of legal compliances he/she is willing to deal with.
While some business structures are relatively investor-friendly than others, investors will always prefer a recognised and legal business structure. For example, an investor may hesitate to give money to a sole proprietor. On the other hand, if a good business idea is backed by a recognised legal structure (like LLP, Company, etc) the investors will be more comfortable making an investment.
Salary is not directly provided to a director of a private limited company. However, the Companies Act, 2013 provides that directors can be given remuneration by the company. Remuneration means any money or its equivalent given to the director for the services rendered by him. Thus, the salary provided to a director will be known as remuneration provided by the company for the services rendered by him/her.
Yes. Every company, whether private or public or one person company, must mandatorily conduct statutory audits of its books. The company must get its book audited every year from the auditor of the company and the audit report must be submitted by the auditor to the Board before conducting the company AGM.
Yes. Since a private limited company has perpetual succession, it has continuous existence. Perpetual succession means a company will continue to be a legal entity irrespective of the death of the founder/promoter or any director of the company. Thus, a company will be in existence until it is dissolved for the reasons stated in the Companies Act, 2013 or until the Board and shareholders decide to wind up or close the company.
Yes, the company registration is completely online. A company or an LLP can be registered only through the MCA portal. The scanned documents of the company/LLP are sent by mail to the MCA and they are processed at the Central Registration Centre (CRC) which acts as a dedicated back office for Company and LLP Registration process. Upon completion of registration, the company/LLP receives a digitally signed Certificate of Incorporation which can be verified by all the stakeholders on the MCA website.
The entire process is completed online, so you don’t have to be present at any particular place for registration. A scanned copy of the documents must be submitted via mail. At the business address, they receive the company incorporation certificate from the MCA.
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