Form your Business in India
                     Form of 
Business Form of Business 
An Opportunity to Achieve Dreams
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Background!! “
In today’s world, where everyone is trying to become his own Boss 
by doing his business and achieving his dreams. Thanks to the 
Government and its “Make in India” campaign, which has relaxed 
the norms of doing business in India and provides numerous 
opportunities to the new entrepreneur to start his own business? 
Government has eased the process to start one’s own business. 
In India, there are various form of business, which a person can opt 
according to his needs, requirements and financial capacity for 
achieving his dreams. Therefore, it is very important for a person to 
understand the form of business available to him. 
“ 3Background!!
The various forms of business can be classified as follows:
1. Sole Proprietorship;
2. Partnership;
3. Societies;
4. Limited Liability Partnership {LLP}
5. Company:
◦ One Person Company;
◦ Private Limited Company
◦ Public Limited Company
Sole Proprietorship!
This is the most simple and easiest form of doing business. The 
sole Proprietor (Single Person) is the owner of the business. 
There is no specified enactment to govern this form of business or 
running of sole proprietors business. Sole Proprietor is solely 
responsible for all the acts and contracts entered in the course of 
doing business and for Profit and Losses
But there are some restrictions in sole proprietorship concept, as 
the bank does not feel safe and don’t prefer to provide loan to the 
owner and there is no concept of funding in case of sole 
proprietorship as there is no specific law in India which govern 
and control the sole proprietorship.
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1. It is NOT a separate legal entity.
Features of 2. Proprietor has unlimited liability.
Proprietorshi 3. Proprietor is personally liable for all the 
p debts and losses of the business.
4. Proprietor can sue or be sued in its own 
name.
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Partnership!!
Under partnership form of business, 2 or more person enter into 
an agreement to enter into a common business in order to share 
profits earned and shall be personally liable for loss incurred. 
It is governed by the Partnership Act, 1932 and registration of the 
firm is at the discretion of Partners and the same is optional as 
per the abovesaid Act. However, a registered firm can take legal 
action against the firm, partners or third party. It is easy and 
inexpensive form of business as compared to Company form of 
business. 
Partnership firm can be formed by drafting a Partnership Deed 
and business can be immediately started subject to relevant 
sector conditions and local laws etc. 
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1. There should be at least 2 persons to form 
the Partnership Firm;
Features of 2. Every partner act as an agent of another 
Partnership partner;
3. Business of Partnership firm can be 
carried on by all the partners or any one 
of them acting for all;
4. Every partner contributes his capital in the 
agreed ratio;
5. Liability of each partner is unlimited;
6. Partnership Firm can be registered firm or 
un-registered firm under the Partnership 
Act, 1932.
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Societies!!!
Society is an association person which is formed for promoting 
art, charity, research, religion, commerce or any other useful 
purpose. 
The Society Registration Act, 1860 was passed for the 
registration of society in order to give them the status of a 
corporation or a Legal person.
The Societies are formed for the benefit of a particular group or 
community. This type of business earn profits for the benefit of 
the society. 
Therefore the members elect their representative, who shall have 
the contractual authority to do business for the welfare of society. 
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1. Easy formation;
2. Limited Liability of members;
Features of 
Societies 3. Perpetual existence;
4. Social services.
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Limited Liability Partnership!!!!
Now days, people are opting for Limited Liability 
Partnership for doing business due to its special and unique 
features. In actual it is a combination of both Partnership and 
Limited Company. 
Limited Liability Partnership (LLP) is a separate legal entity. In 
general law a LLP is regarded as a body corporate. It is managed 
by the LLP Agreement entered into between the LLP partners. 
Partners in LLP do not receive dividend, but enjoy direct access to 
the flow of income and expenses.
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1. No requirement of minimum capital 
Features of contribution
Limited 2. Minimum of two partners are required to 
Liability form a LLP
Partnership 3. No restrictions on the maximum number 
of partners.
4. Partner’s liability is limited to the extent of 
the agreed contribution in the LLP 
agreement.
5. Minimum annual compliances as 
compared to Company
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Company!!!!!
This form of business is most preferred as they are incorporated 
as a separate legal entity. 
Therefore, the members are different from the Company and are 
not liable for the acts of the Company. It has perpetual 
succession. 
Member may come and member may go but the company goes 
forever, it continues to exist even if all its members die.
1. One Person Company
2. Private Limited Company
3. Public Limited Company
One Person Company
One person company is an another type of Private Company 
having a sole member and a nominee of the Sole member.
All the decisions are taken by the sole person and is solely liable 
for the acts. After his death, the powers are transferred in the 
hands of the Nominee. 
An One Person Company has to mention the word “OPC” in its 
name.
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1. Only a natural person who is resident in 
Features of India and citizen of India can only be 
One Person appointed as member of One Person 
Company.
Company
2. Maximum turnover a One Person 
Company can make is 2 Crore. Also the 
maximum share capital Rs. 50,00,000/-
3. Only one shareholder is allowed in One 
Person Company.
4. It is a separate legal entity
5. Minimum number Director is 1.
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Private Company
Private Company shall have atleast 2 members and maximum 
200. 
The members appoint their representative called as Director who 
shall look after the day to day management. 
Its shares can not be traded on any stock exchange i.e. BSE or 
NSE, nor issued to public via Public Issue. 
Companies Act, 2013 has granted a number of advantages and 
exemptions to private limited companies in order to facilitate 
doing business in India easily and effectively without much 
compliance and incurring much cost.
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1. Shareholders right to transfer shares is 
Features of restricted
Private 2. The number of shareholders is limited to 
Limited 200
Company 3. An invitation to the public to subscribe to 
any shares or debentures is prohibited.
4. Minimum number of Director is limited 2.
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Public Company
Public Company shall have minimum 7 members and no limit for 
maximum number. 
The shares of a Public Company are freely transferable and the 
holders have easy exit option. 
Further shares of Public Limited Company can also be traded on 
stock exchanges like BSE & NSE after complying the suitable 
provisions of the law and its share can also be issued to public via 
Public Issue.
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1. The liability of its members is limited
Features of 2. Its shares are freely transferable 
Public 
Limited 3. No limitation on maximum numbers of 
members.
Company
4. Open invitation to public to subscribe to 
its shares is allowed.
5. A public company is required to have at 
least three directors.
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