Different Types of Business Organizations in India
In India, there are several forms of business organizations viz, Limited Company, Limited Liability Partnership (LLP), Partnership Firm and Sole Proprietorship. While selecting a business organisation, one must have an understanding about the different types of business structures, its merits and demerits, public acceptance and image.
Type of Business | To Whom and When is it Suitable? |
| ‘Private Limited’ from of business is suitable for a team entrepreneurs (business partners) with formal business relations and want to start a very formal and organised model of business. Also, ‘Private Limited’ is the best suitable option where the entrepreneurs are expecting external investment to the venture in near future. | |
| ‘LLP’ from of business is suitable for a close team entrepreneurs with formal business relations who do not expect external investors to the venture in near future. LLP can be converted to private limited company at later point when the business is ready for investment. LLP is also suitable for related related entrepreneur team (eg. Husband and wife) who want to start a formal business with advantage of limited liability. | |
| ‘OPC’ from of business is suitable for a single entrepreneur who wants to start a business without any business partners and to take advantage of Limited Liability. Please note that addition of shareholders / partners to business in future is not possible to ‘One Person Company’ form of business. | |
| ‘Partnership’ from of business is suitable for a team entrepreneurs with formal business relations or personal repartitions. Partnership is a business defined by a partnership agreement. Partnership is also a formal form of business without the advantage of Limited Liability. | |
| ‘Proprietorship’ from of business is suitable for a single entrepreneur who wants to start a business by self in an informal way. There is no specific registration for a Proprietorship. Also, the proprietor will not get the advantage of Limited Liability and cannot add partners to business at any point of time. Also, a Proprietorship’ cannot be converted to OPC / LLP/ Company in future. |
Success of a business always depends on how one can organise it and pursue it to accomplish goals. A business can be organised in different forms such as sole proprietorship, partnership, limited company or limited liability partnership.
Basically these organizations are classified into incorporated and unincorporated structures. Company and LLP are the incorporated business organizations and Partnership Firm and Sole Proprietorship are the unincorporated structures.Incorporated business structures are created under respective laws such as Companies Act and LLP Act and will be treated as separate legal entities.
Register Your Proposed Business Name as ‘Trademark’
Before publishing your business / brand name on Facebook / Twitter/ Instagram, register it as ‘Trademark’ to protect the same from deception by unscrupulous people.