Hey! Do you want to start a Business?
But Stuck Don’t know which company should be opened. Which company formation is more beneficial for me?
Learn the basics about the company Formation and you can decide which company is best for you –
There are many types of Company Formation, however, we are taking main 4 types to start –
Proprietorship –
A sole proprietorship is a form of business that is individually owned by a person. It is also known as a single trader or just proprietorship. This is a type of business entity in which there is the only single owner who starts a business to earn a profit.
( Positive / Negative) –
- Be your Own Business
- Simplicity
- Company Name is not secured
- Cannot offer Shares
- For expansion, you need to switch to a further form of company
Partnership –
A business partnership is a specific kind of legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners. The partners in a business partnership invest in the business, and each investor/partner has a share in the profits and losses.
( Positive / Negative) –
- Liabilities are divided
- Profit/loss divided between partners
- Name is not secured
- A good understanding between partners is important
LLP ( Limited Liability of Partnership) –
It gives the benefits of limited liability of a company and the flexibility and ease of a partnership.
Also, it continues to function even if the partners change. It includes some rights and duties for the partners which are regulated by an agreement between the partners. An LLP is a separate legal entity, liable to the full extent of its assets, as well as have perpetual succession. However, the liability of the partners is limited to the agreed contribution in the said limited liability partnership
( Positive / Negative) –
- Limited Liability
- Any number of partners can be involved in business
- The flexibility of working for partners
- Separate Entity
- Having Legal status
- Penalty
Private Ltd –
The private limited company a type of company that offers limited liability, or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are defined in the company’s bylaws or regulations.
This type of business entity limits owner liability to their shares limits the number of shareholders
( Positive / Negative) –
- Pvt. Ltd. Co. is a Separate Legal Entity.
- Good for Expansion of the Business
- In the Private Limited Company there would Limited Liability for members.
- Shares of a company limited by shares are transferable by a shareholder to any other person.
- It is easy to fetch funding in a private limited company by transferring of shares.
- It restricts the transfer ability of shares by its articles.
- In a private limited company the number of members in any case cannot exceed 50.
This will help you which form of company is more suitable for you.
Also, you can take decision based on below –
- Financial capacity
- Resources in your hand like Manpower, Setup etc..
So I hope you can take decision, so if you don’t want to think more just start your journey with the Proprietorship and go ahead.
Don’t think too much just TAKE ACTION.
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