• Posted on: 27 February 2016
  • By: admin

       Download Comparison Sheet

 

 

 

Entity type

Members

Decision Makers

Registration

Registration Process

Liability

Best Suitable For

Compliances

Prestige

Closure

MahaUdyog Suggestion

 

Proprietorship

1

Proprietor

Not Compulsory. Only Shop & Establishment

1 day

Unlimited: Personal and Business Property is same

Single Proprietor- like trader, Single Decision maker, Not much headache of Registration

Under Tax laws: when minimum threshold limit is exceeded + Renewal of Shop and Establishment licence

Low

Simple

Best Suitable if you don’t want more Compliace and not prone for prestige. Profit of your propretorship is taxable under indicidulal slabs. So you can take benefit if your taxable profit is not much more. No other Compliacnes required except renewal of Shop and Establishment Certificate and Tax laws and any other laws if applicable.

 

Partnership

2

Partners

Compulsory: Indian Partnership Act, 1932

4 weeks

Unlimited: Personal and Business Property is same

Partners who want to continue sharing profit/loss basis without much administrative regularities

Under Tax laws: when minimum threshhold limit is exceeded

low

Simple

Best Suitable if you are not prone for limited liability and don’t want much Compliance headache. You can make good profit which you can divide as per share. The Partnership Firm is not distict entity from you partners.

 

LLP

2

Partners

Compulsory: LLP Act, 2008

2-3 Weeks

Limited: LLP is different entity in the eyes of law

Major for Professionals (when two or more professionals can come together) who wants distinct individual entity and Limited Liabilty- Ready for Compliances under LLP Act 2008

Under Tax laws: when minimum threshhold limit is exceeded and LLP Act (Annual Filing and Changes in entity)

High

Long Procedure

LLP is suitable more for professionals when two or more professionals can come together and start business. The profit is shared and also can be taken as Salary. But there are Complainces under LLP Act and penalty is heavy. Your Profit is taxable as per Corpoate Taxes around 30%

 

One Person Company

1

Director(s): Minimum 1

Compulsory: Companies Act, 2013

2-3 Weeks

Limited: Company is different entity in the eyes of law

Proprietor who wants more professional set up and ready for Compliances

Under Tax laws: when minimum threshhold limit is exceeded and Companies Act (Annual Filing and Changes in entity- Exempted under some Sections)

High

Simple under FTE

OPC is prestigious than Propretorship and suitable if you are single decision taker and don’t need much capital as well as don’t want to give shares to any one else. Best when you can handle your own things in better way, turnover lesser than 2 Crores and Capital lesser than 50 lacs. Annual Complaince under Companeis Act need to be take care of! Your Profit is taxable as per Corpoate Taxes around 30%. You can take your share as Salary, which is deductable as expenses from your Company's Income.

 

Private and Public Company

Private: 2/200 Public 7-Unlimited

Directors: Private: Minimum 2 Public: Minimum 3

Compulsory: Companies Act, 2013

3-4 Weeks

Limited: Company is different entity in the eyes of law

When more professional Set up and prestige is desired and Promoters are ready for Compliances

Under Tax laws: when minimum threshhold limit is exceeded and Companies Act (Annual Filing and Changes in entity- Private Company is exepmted under some sections.)

Very High

Simple under FTE for Private Company For Public Company: bit difficult

Private Company is more suitable if you want to run business on larger and more professional scale. You are okay to take care of your Compliances under Companies Act along with Tax laws and other acts as applicable, and you are also okay with Corproate Tax @ 30%. But you aim high and possibly will convert it to Public Company later on or looking of IPO. Public Company is suitable if you are taking the benefits of large shareholding and want to distribute your shares to large number of people. If you are aiming IPO, you have to be a Public Company or should convert to Public Company.