Launching a Startup in India Which type of company should you register

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In this article we will help you figure out which kind of company should you register if you are starting up. Don't forget to read completely and go through the videos shared in the article.

Type of companies which you can register in India

 

Private Ltd Company
A private company has the following features:

  1. Restricts the right of the shareholders to transfer their shares.
  2. Has a minimum of 2 and maximum of 50 members.
  3. does not invite public to subscribe to its share capital
  4. Must have a minimum paid up capital of Rs. 1 lakh or such a higher amount which may be prescribed from time to time.

Public Ltd Company :
A public Ltd company has the following characteristics:

  1. It allows the shareholders to transfer their shares.
  2. Has a minimum of 7 members, and for maximum there is no limit.
  3. it invites the general public to subscribe to its shares
  4. Must have a minimum paid up capital of Rs 5 lakh or such a higher amount as may be prescribed from time to time.

Unlimited Company
Unlimited Company is a form of business organization under which the liability of all its members is unlimited. The personal assets of the members can be used to settle the debts. It can at any time re-register as a limited company under section 32 of the Companies Act.

Sole proprietorship
Sole proprietorship is a form of business entity where a single individual handles the entire business organization. He is the sole recipient of all profits and bearer of all loses. There is no separate law that governs sole proprietorship.
 

Joint Hindu Family
Joint Hindu Family is a form of business organization wherein the members of a family can only own and manage the business. It is governed by Hindu Law.
 

Partnership
Partnership is the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all . It is governed by the Indian Partnership Act 1932.
 

Co-operatives
Co-operatives is a form of voluntary organization, wherein the members work together for the promotion of the interests of its members. There is no restriction to the entry or exit of any member. It is governed by Cooperative Societies Act 1912.
 

Limited Liability Partnership
Under LLP (Limited Liability Partnership) the liability of at least one member is unlimited whereas rest all the other members have limited liability, limited to the extent of their contribution in the LLP. Unlike general partnership this kind of partnership does not get terminated by the death or insolvency of the limited partners. It is governed by Limited Liability Partnership Act of 2008.

Which type should you select

Sole proprietorship - if you are alone and starting small, and doesn't have much to worry about the tax burden then this is the best option for you. 

Tax slab of sole proprietorship firm will be same as that of propritor/owner of the company. 

Registration cost - Free and can be done at MSME website which is converted to 'Udyog Adhaar' website itself. Here's the video where you can learn how to register your proprietorship firm

Kind - any kind of business can be sole proprietorship. It doesn't matter whether you are selling anything or providing a service. Shop owners, manufacturers, software creator, logistics provider, e-commerce etc can be sole proprietorship firm