You want to Start a Startup: know here which Business Structure you Need

HERE WE ARE GOING TO TELL YOU WHICH BUSINESS STRUCTURE IS BEST FOR YOUR STARTUP & ALSO HELP YOU GETTING FUNDING FROM THE INVESTORS.

TYPES OF BUSINESS STRUCTURE IN INDIA FOR START UP

PRIVATE LIMITED COMPANY

• The private limited company is governed by section 2 (68) of Companies act 2013 and relevant rules.
• It is form of Business in which small group of people manages this type of entity privately without any Public interference.
• The Document in which constitution of private limited company is written is known as "Memorandum of Association (MOA) and Articles of Association (AOA).
• To form private limited company the requirement of minimum 2 Directors and 2 Shareholders/Subscribers.
• The private limited company having maximum 200 shareholders as per companies act 2013.
• The private limited company issued it's share through private placements.
• As on date the incorporation of Private company is totally hassle free and Having very low cost of Incorporation.
• It's not raised fund from public through public issue or its cannot issued prospectus to the general public.
• It's can not listed on the National Stock Exchange or can't sell its shares to general public through Stock Exchange Platform.

PUBLIC LIMITED COMPANY

• The public limited company is governed by section 2 (37) of Companies act 2013 and relevant rules.
• The public limited company is used word "LIMITED" in the end of its name.
• It's can be listed on the National Stock Exchange or can sell its shares to general public through Stock Exchange Platform.
• It's raised fund from public through public issue or it can issued prospectus to the general public.
• The Public Limited Company have minimum 3 Director and Maximum 15 directors.
• The public limited company having no maximum limit of shareholders as per companies act 2013.
• To form public limited company the requirement of minimum 3 Directors and 7 Shareholders/Subscribers.
• The public limited company issued it's share through private placements as well as public issue.

LIMITED LIABILITY PARTNERSHIP

• It's a form of business, which is governed by Limited Liability Partnership Act, 2008.
• LLP having its own separate legal entity and its combination of company & Partnership Firm.
• The Document in which constitution of LLP is written is known as "LLP Agreement"
• The LLP having minimum 2 partners and there is no limit on maximum partners.
• it's can not raised fund from general public through open offer or prospectus or public issue.
• The LLP is extended version or form of Partnership firm and having all features of partnership firm except Unlimited Liability, Separate Legal entity & sue or to be sue (LLP sue anyone or to be sue by someone to LLP not its Partners).
• The word "LLP" is mention in the end of entity name. if its registered as LLP.
• LLP registration is less complex than registration of Partnership firm under Partnership Act.
• In LLP one partner is not liable for the act of other partners (Individual Protection), but in Partnership firm its happen (every partner is liable for the act of other Partners).

OPC (ONE PERSON COMPANY)

• This form of business is governed by section 2 (62) of companies act, 2013
• OPC is one person company in which he act as promoter, director and also member/shareholder of the company.
• its is extended version or form of sole proprietorship firm in which having the features of private limited company.
• There is no paid up capital in OPC.
• The OPC having is its own separate legal entity distinguished from its member.
• The OPC having one member and also have one nominee which is carry out business after deceased of it's sole member.
• It's can not listed on the National Stock Exchange or can't sell its shares to general public through Stock Exchange Platform.
• The cost of compliance is too low in this form of business because he don't need to hold Annual General Meeting and many more exemption in Companies act, 2013.
• It's not raised fund from public through public issue or its cannot issued prospectus to the general public.
• OPC have minimum one Director and Maximum 15 directors.
• The perpetual succession is very low because if nominee is deny to become member of company then it's automatically dissolved.

CONCLUSION

• OPC, Proprietorship Firm is best for small business because they have very low cost of compliance in comparison to other form of Business but OPC have Limited liability and separate legal status.
• Private limited company registration is best for startup which have expanding plan don't want to raised fund from General public through public offer or prospectus or Stock exchange and they also want to manage there company privately without any Public Interference.
• LLP is the business form having features of private company as well as partnership firm and its used generally by professional (CS, CA,CWA and Doctors etc) and it's easily to dissolve
• Public Limited Company Registration is used by those business who want to raised Fund from General public through public offer or prospectus or Stock exchange and want to business by engaging large group of people.

EVERY BUSINESS FORM HAS ITS OWN PROS & CONS. SO, WE NEED TO CHOOSE ENTITY AS PER OVER BUSINESS MODELS.