Form Of Business Organisation In India

1. Form Of Business Organisation In India

2. A business can be established in various form of legal structure. Each form of business has its own features, restrictions and advantages. This decision of choosing one over the other impacts concerned entity’s ability to raise funds, tax liability, legal restrictions and so many other aspects. The most commonly form of business used in India are: Private Company: A private limited company is the most popular form of business in India till date. The reason is the exemptions and privileges enjoyed by the private limited company coupled with the fact that shareholders can run business among them and hold its shares privately like a family or closed knit group.

3. A private limited company is basically an entity of not less than two and not more than 200 members, whose liability is limited. As the business is run privately and shares are also hold in the same way so the shares of private limited company cannot be traded on public exchanges and are not issued through an initial public offering. Companies Act, 2013 has granted a number of privileges and exemptions to private limited companies in order to facilitate doing business in India easily and effectively without much compliance. As this closed knit group, so there will be restrictions on transfer of shares in private limited company.

4. Public company: A public limited company is one where minimum number of members is seven and no limit on the maximum number of members. It is a Company which can get list its shares on public bourses which may be purchased by the public and trade freely on the open market. Unlike private company, the shares of a public limited company can be easily transferred in accordance with the provisions of articles of association. Partnership: It is a form of business organisation in which two or more partners manage and operate the business to achieve and share profit and losses. It is easy and inexpensive form of business to establish and manage as compared to corporate form of business.

5. These persons having stake are known as Partner and responsible for sharing the losses and profits of the firm in an agreed ratio (i.e. profit sharing ratio). The said partners are personally liable for the debts of the partnership. Partnership firm can be created by drafting a Partnership Deed and business can be immediately started subject to relevant sector conditions and local laws etc. It can be registered firm or un-registered Firm. However it is always advisable to get the firm registered to enjoy extra legal privileges/benefits. The main disadvantage here is that it does not have limited liability like LLP or private limited company.

6. Sole Proprietorship: A sole proprietorship is an entity which is wholly owned, managed and controlled by a single person known as proprietor, who receives all profit and has unlimited liability. In the eyes of law there is no distinction between the sole proprietor and the business owned by him/her and therefore the proprietor is the only owner of each and every asset the sole proprietorship business has and accordingly he/she is responsible for all the debts of the business. OPC: OPC is newest form of corporate entity which has been recently recognised under the Companies Act, 2013. It is basically for those who run business singly like sole proprietorship

7. but want limited liability. One Person Company means a Company which has only one person as a member. It is classified as Private Company under the Companies Act, 2013. It is a Company registered with only single person as a shareholder. One Person Company is a separate legal entity from its members. LLP: The Limited Liability Partnership (LLP) is essentially a general partnership in form, with one important distinction that the partners’ liability is limited to the extent of the amount he/she has invested in the LLP. LLP is managed as per LLP agreement. LLP partners do not receive dividend, but enjoy direct access to the flow of income and expenses. For more details on non disclosure agreement india, please check out this site.