Let’s take a look at some important questions every entrepreneur must ask himself before he/she finally decide upon a business structure.

(I) How many owners/partners will your business have?

If you are a single person who owns the entire initial investment required for the business, a One Person Company would be ideal for you can initiate the process by OPC Company registration. On the other hand, if your business has two or more owners and is actively seeking investment from other parties a Limited Liability Partnership (LLP) Registration India or Private Limited Company would suit you best.  

(ii) Control

If you are a single person, you can do Proprietorship Registration or OPC Company Registration. Entire control will remain in your hand. If you want business with some person, you can register partnership firm, LLP Registration India, Private limited company.

(iii) Willingness to bear the entire liability of the business

Business structures like sole proprietor, HUF, and partnership firm have unlimited liability. This means, in case of any default in loans, the entire money will be recovered from the members or partners in profit sharing ratio. The risk to personal assets is high in these cases. Whereas, Companies and LLPs have a limited liability clause. This means that the liability of its members is restricted to the amount of contribution made by them or the value of shares each member holds.

(iv) Income Tax Rates Applicable to businesses

The income tax rates applicable to a sole proprietorship and a HUF are the normal slab rates. In case of a sole proprietorship, the business income is clubbed with the individual’s other income. But in the case of other entities like partnership and company a tax rate of 30/25 is applicable.

(v) Plans of getting money from investors

As mentioned earlier, it is difficult to get investments when your business structure is unregistered. Entities like LLP Registration India and Private Limited Company are trusted when it comes to investment. Make sure you choose the right structure, seek the help of an expert so that you register under proper guidance.

(vi) Scale of business

If you want to do business on large scale than you have to register your LLP Registration India, OPC Company Registration, private limited company, limited company.