2. Learn with Taxtriangle
Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
3. Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
5. Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
6. Business Formation deciding factor of
Startups Fate
Amongst all the requisites that lay down the foundation layer of any startup business,
formation of business entity plays the pivotal role in deciding its success factor in a
major way.
Business Forms
SoleProprietorship
PartnershipFirm
Company
LimitedLiability
Partnership
New Startups most often chose the most convenient form of business
assuming it the least concerned factor for success.
7. Types of Business Forms
Sole
Proprietorship
Partnership
Firms
Company
What does these terms actually mean?
What are they used for?
Will I need to bother?
What are the merits/ demerits of them?
How are they differentiated from each other?
How can I form a firm or proprietorship or a company?
9. Technical Definitions for Sole proprietorship can be from Wiki or Google;
however, in layman language- Proprietorship is a business enterprise
exclusively owned, managed & controlled by single person with all
responsibility, authority and risk.
Characteristics of sole proprietorship
• One man show
• No profit/ risk sharing
• No separate legal Existence
• Ease in management
• Prompt decision making
• Ease in formation
• Unlimited Liability
• Easy to dissolve
Sole Proprietorship
10. Merits of Proprietorship
• Motivation to Work
• Flexible to adapt
market changes
• No Profit/ risk
sharing
• Generates
employment for
others
• Easy Formation
• Limited Statutory
provisions
• Easy to Dissolve
• Independent
Control
• One man show
• Quicker Decisions
Simple
Management
Simple
Statutory
Compliances
Flexible
Self
Employment
11. De-Merits of Proprietorship
One Man Show
Lack of
Specialization
Limited
Finance
Lack of
Stability
Unlimited Liability
Higher
Uncertainity
Higher
Risk
Limited
Expansion
13. A partnership is the relationship between two or more persons who join to carry
on a trade or business with the intention of profit sharing. Each person contributes
money, property, labor or skill, and expects to share in the profits and losses of the
business.
Each member of such a group is known as partner and collectively known as
partnership firm. These firms are governed by the Indian Partnership Act, 1932.
Characteristics of Partnership Firms
• Contractual relationship
• Voluntary registration
• Sharing of risk & rewards
• Unlimited liability
• No separate legal entity
• Decentralized control
• Restriction on transfer of interest
• Mutual Cooperation
Partnership Firms
14. Merits of Partnership Firm
• Self- Motivation
•Flexible to adapt
market changes
• Flexible
Operations
• Division of risk
• Abundant Capital
• Better Scope of
Expansion &
Growth
• Easy Formation
• Limited
Government
Regulations
•Easy to Dissolve
•Tax Advantage
• Qualitative
Decision making
• Favorable Credit
Standing
• De-centralized
Controls
Collaborative
Management
Simple
Statutory
Compliances
Flexible
Self
Employment
15. De-Merits of Partnership Firm
Instability
Lack of
Specialization
Higher
chances
of
conflict
Lack of
Public
Confidence
Unlimited Liability
Higher
Uncertainity
Higher
Risk
Possible
misuse of
funds
17. A Company is an artificial person created by law, having separate legal entity with
perpetual succession and a common seal. A company is a juristic person (in the
eyes of law it is a person). The company can sue and it can be sued. It has its own
name and a separate legal entity, distinct from its members who constitute it. A
company has its own property, the members (shareholders) can not claim the
property of the company as their own property.
Characteristics of Company
• Contractual relationship
• Perpetual Existence
• Sharing of risk & rewards
• Limited liability
• Separate legal entity
• Decentralized control
• Management & Ownership are separate
• Business Stability
• Common Seal
Company
18. Merits of Company
• Abundant capital
•Opportunity for
Foreign Direct
Investment
• Flexible Capital
Structure
• Division of risk
• Perpetual
Succession
• Favorable Credit
Standing
• Better Scope of
Expansion & Growth
• Liability limited to
share capital
• Taxation
• Higher Public
Confidence
• Separate Legal Entity
with common seal
• Qualitative Decision
making
• De-centralized
Controls
Separate
Legal
Entity
Limited
Liability
No
Capital
Constraint
Stability
19. De-Merits of Company
Non Transferability
Restriction on
Shares Transfer
Concentrti
on of
economic
power
Limited
Membershi
p upto 50
Statutory Compliances
Higher Statutory
compliances
Higher
Taxation
Rate
Mandatory
Audit
20. Requisites for a Private Limited Company
Minimum 2 Directors
Minimum 2 Shareholders
Minimum Share capital of Rs 100,000
Registered Office
Director Identification Number (DIN) for all the
directors
Digital Signature Certificate (DSC) for one of the
directors
21. Formation of Private Limited Company
Issue of Certificate of Incorporation
Payment of ROC Fees
Filing e-forms with ROC along-with Affidavit
Drafting of MOA & AOA
Approval for Company Name
Acquire/ Register DSC
Apply for DIN
22. Requirement of start ups
Types of Business forms
Sole Proprietorship
Partnership Firms
Private Limited Company
Comparison of Business forms
23. Distinction between all Business Forms
Point of
Distinction
Sole Proprietor Partnership Company
Definition Business owned
by one person
An association of two
or more persons
carrying on business in
common with profit
sharing motive
An artificial person
created by law with
perpetual succession
and a common seal.
Governed By No Governing
Body
Partnership Act, 1932 The Companies Act,
1956
Ownership One person Generally between 2
to 20 partners.
Upto 50 members
Legal Entity No Separate Legal
Entity
No Separate Legal
Entity
Separate legal entity
from its members
and directors
Liability Unlimited Unlimited Limited
24. Continued……….
Point of
Distinction
Sole Proprietor Partnership Company
Property
Ownership
Rights
Can own property
in proprietor’s
Name
Cannot own property
in firm’s name
Can own property in
company’s
name
Statutory
Compliances
Quick and easy to
set up
Quick and easy to set
up in comparison to
Companies
Numerous
formalities &
statutory
procedures to
comply with
Profits taxed
at
Personal
Income Tax Rates
Partners’ personal
Income Tax Rates
Corporate Tax Rates
Continuity in
Law
Exists as long as
the owner is alive
and desires to
continue the
business
Exists subject to
partnership
agreement
A company has
perpetual
succession until
wound up or struck
off
25. Services we offer
Company Formation Services
Partnership Firms/ LLP Registrations
Tax Advisory & Compliance
Auditing Services
Company Law Services
Corporate Financing Services
Accounting Services
Business Valuation
Business Advisory Services
VAT/ Service Tax Registrations
Fixed Asset Verification
FEMA & RBI related Services
26. Need Additional Help
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