02
Mar

Choosing the Right Type of Company for Your Setup Business in India

Choosing the right business structure after you have decided the other significant things to setup business in india is the other very important part of the process. 

Here, you have various entities to choose from while you plan of opening a business in India like a sole proprietorship, partnership (general partnership, limited liability partnership{LLP} and company ( private limited company and one person company{OPC}).

If you have a clear idea and vision about your business goals and objectives, your capital pool, the scale of your business, the level of compliance you are accepting from your business then choosing from the aforementioned business entities is a very easy task for you.

We are going to discuss a few factors you need to keep in mind while choosing the right type of business structure.

  • Selecting the right business structure can be influenced by the number of owners. If there is a single owner then a proprietorship firm or one-person company can do them justice. On the other hand, if it has ownership of multiple people then the partnership firm, LLP, and the private limited company will work the best.
  • The size and the working of the company is directly proportional to the risk associated with the business. If you choose the partnership firm, each member is subjected to the risk. Whereas, there is a fully protected liability in the case of companies and LLP. To limit the personal risk, OPC is the best to serve the purpose.
  • If you want to take control over all-important decision-making related to your business then you can think of proprietorship otherwise partnership distributes the power of making decisions amongst the different members of the company. In case of the company, directors and shareholders take charge to make necessary decisions. 
  • Private companies are privileged to raise funds. Investors and banks invest their money in structured entities. The fact that business is not capable enough to raise all the money itself, therefore, requires funding for better functioning.
  • While you register your company in India, there is a certain cost you pay which varies for every business structure. In the case of Proprietorship firms, it’s convenient and inexpensive but what matters is the maintenance cost rather than the registration cost. Former is the highest in the company followed by LLP.
  • Professional certification and centralized registration offer companies and LLP higher credibility. The financial and other significant data are available to the public via different platforms. On the other hand, proprietorship has little to no credibility.

All these factors must be considered to choose the appropriate business structure for your company. Every entity has advantages and disadvantages attached to them so it’s on you that what’s on top of your priority list. You can choose the structure which justifies your requirements. Choosing the right type of business entity can be a very daunting process and at the same time, you can’t even go wrong with it. At DBPL, we ensure that you don’t face any difficulties. With a specialized team of legal consultants, we clear all your doubts and assist you with appropriate suggestions.