Business Incorporation
Incorporating a business and selecting the appropriate legal entity is a crucial step, as it influences key decisions such as expansion plans, tax liabilities, incentives, and subsidies. Each type of legal entity has its own distinct characteristics, making it essential to choose wisely after a thorough assessment of the options..
Various Registration Services
Sole Proprietor/ Proprietary concern
A sole proprietorship in India is owned and operated by a single individual who has complete control over the business. The owner is personally liable for all debts and profits, as there is no legal distinction between the owner and the business. It is easy to set up, with minimal regulatory compliance. However, the owner has unlimited liability, meaning personal assets can be used to cover business debts. For taxation, the income is considered personal income and taxed under individual income tax slabs.
Partnership Firm/ LLP
Partnership Firm: Owned by two or more partners with shared profits and liabilities. Partners have joint liability, and income is taxed as personal income of the partners.
LLP: Combines features of partnerships and companies. Partners have limited liability, protecting personal assets. It is a separate legal entity, and income is taxed at a flat rate, with tax benefits for LLPs in terms of deductions and compliance requirements.
Both structures offer flexibility but differ mainly in liability and taxation.
Company/ Corporation
Separate Legal Entity: A company is a separate legal entity from its owners, meaning it can own property, incur debts, and enter into contracts independently.
Limited Liability: Shareholders' liability is limited to the amount unpaid on their shares, protecting personal assets.
Perpetual Succession: The company continues to exist regardless of changes in ownership or the death of shareholders.
Regulated Structure: Companies must adhere to strict regulations under the Companies Act, 2013, including regular reporting and governance requirements.
Trust/ NGO
Legal Structure: Governed by a trust deed or registration under the Societies Registration Act or the Companies Act (for Section 8 companies).
Purpose: Operates for the public benefit rather than profit.
Governance: Managed by a board of trustees or members.
Tax Benefits: Eligible for tax exemptions and deductions under applicable laws.
Accountability: Required to maintain transparent financial records and submit regular reports to regulatory authorities.