This slide upon choosing and selecting best one forms for business like pvt ltd. companies, partnership, LLP,

1. Forms of Business – Which type
of company to choose?
By LegalRaasta.com

2.  We, on a daily basis interact with many
entrepreneurs, inspire with many ideas of theirs, and
the kind of imagination they carry is really awesome.
 But, in almost every case, we notice that they all lack
the legal part or even the basic knowledge about the
legal environment. Due to this, they sometimes end
up either paying huge penalties or paying to the
professional who takes advantage of their lack of
knowledge about the subject
 Legalraasta.com has taken initiative to pour the basic
knowledge about the forms of business, registering
companies and also about the legal environment in
which they will work in future.
Purpose and Objectives

3.  Every business whether registered or unregistered works under a
form. The form of the business organisation creates a severe
impact on the business and its profits.
The 4 most common types of business organisations / companies
is as follows
Introduction
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4.  Choosing a business form is like choosing a
vehicle for your journey. You must choose the
form seriously, because it will provide you ease in
the long run, not to mention the added legal
benefits
 We have noticed that startups tend to choose
their company type in a rush
(generally, a Private Limited Company) which
not only costs more, but also keeps them away
from many legal benefits.
 However, one should always consider the Pro &
cons of easy option:
Choosing the right form of
business?
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5.  Private Limited Company is most popular business vehicle for serious
entrepreneurs that offers limited liability to its shareholders but that
places certain restrictions on its ownership. It has been refined over years
to offer best of practices and policies needed for businesses to help them
grow and scale smoothly.
 Other advantages includes:
 Stakeholders are not typically liable for corporate debts and liabilities.
 Less number of compliance requirements.
 Ability to issue to ESOPs, sweat equity and other incentives which help
attract best of talents.
 Easier to raise investments and corporate loans. Investors prefer only Pvt.
Ltd. companies. If you do not have one, they may ask you to convert your
business to Pvt. Ltd. Co. before releasing investments.
 Flexibility to raise investments or loans from NRIs and Foreigners.
 High credibility and branding.
 Offers transparency at various levels.
Private Limited Company
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6.  LLP is catching momentum as it has very good mix of
various policies and guidelines to suit startups, professionals
and other services based companies. It offers protection of
personal assets against company debts & liabilities and has
lower compliance requirements.
Other advantages includes:
 Stakeholders are not typically liable for corporate debts and
liabilities.
 Higher tax savings. Profits distributed to stake holders are
not subjected to double taxation
 It has perpetual succession. Partners can be changed at any
point and the company continues to exist
 Low setup costs
 Estimated time: 4-6 weeks
Limited Liability Partnership
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7.  A Public Limited Company is a Company limited by shares
in which there is no restrictions on the maximum number of
shareholders. It can offer its shares or debentures to Public,
can make or accept deposits from Public and there are no
restrictions on the transfer of shares. The liability of each
shareholder is limited to the extent of the amount of shares
subscribed. However, the liability of a Director / Manager of
such a Company can at times be unlimited.
 The minimum number of shareholders is 7 and Directors is
3. It also has a minimum share capital requirement of
Rs.500,000. A Public Limited Company should be registered
with Registrar of Companies (RoC) of the respective State
under The Companies Act, 1956. Although the registration
with RoC is on State level, it is free to do Business anywhere
in India.
Public Limited company
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8. One person company
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 One person company is a new concept in India which has been introduced by the
companies act 2013. In the old Companies act 1956 a minimum of two directors and
shareholders were required to form a private limited company. However in case of a
One person company, only 1 person is required who can be a shareholder as well as
the Director. Hence the name, One Person Company.
 The concept opens up spectacular possibilities for sole proprietors and
entrepreneur who can take the the advantages of Limited liability and
corporatization but were held back in doing so because of the requirements of
finding a second director or second shareholder.
 This is a concept that is expected to give big impetus to Corporatization in the
country. The only care to be taken is that there should be no regulatory mess ups
like the ones which hampered the growth of Limited Liability Partnerships in this
country. Otherwise the rules framed so far with respect to One Person Company
have been very sensible.
 This is a concept that is expected to give big impetus to Corporatization in the
country. The only care to be taken is that there should be no regulatory mess ups
like the ones which hampered the growth of Limited Liability Partnerships in this
country. Otherwise the rules framed so far with respect to One Person Company
have been very sensible

9.  Partnership Firms in India are governed by
the Indian Partnership Act, 1932. As per
Section 4 of the Indian Partnership Act:-
 “Partnership is the relation between persons who
have agreed to share the profits of a business
carried on by all or any of them acting for all”
 Thus as per the above definition, there are 5
elements which constitute of a partnership
namely: (1) There must be a contract; (2)
between two or more persons; (3) who agree to
carry on a business; (4) with the object of sharing
profits and (5) the business must be carried on by
all or any of them acting for all.
Partnership firm
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10.  This presentation has been compiled by CA
Pulkit Jain, CEO & Founder at
LegalRaasta.com
 LegalRaasta.com in an online platform where
you can take care of all your startup, business
& legal needs via simple online forms
 To help entrepreneurs, we provide legal and
CA services at discounted rates.
 Please visit us at www.legalraasta.com
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