If you wanted to step into the trade market all you need is to do is register your firm with the top list of legal consultants. There are lots of varieties in the forms of business. All are different in their structure and functionalities. The business can be OPC, Private limited, Public limited, LLP or any other. Here in this blog, I am going to expound the each variety in a simpler manner and thus you can take your work simpler.
The start-up seekers have been finding the new form of strategies and make their registration simpler when they looking into this blog. The government each year proposing different sheer amount of requirements. Thus people get confused about the up to date information. This blog is the complete solution for such complaints. Some legal consultants do not aware of the government requirements and mode of business registrations.
Guide list to start-ups
They guide the start-ups founders in a wrong way. What it cause? People get trapped in legal requirements and penalties. For example, selecting the mode of business as private limited company instead of LLP, when a LLP may suit their business better.
Most of the legal professionals do this type of mistakes. They are only aiming to get the payment. Those consultants are not bothering about the client’s situation and their requirements. They are forcing them to accept the requirement by mind washing. But here in this blog, I am going to flesh out all the legal features of each structure and explore which business they suit.
Peculiarities of Private Limited Company
The private company is mainly for small types of businesses. The liabilities of all the members are limited to the amount of shares held by them. Each shares of the private limited company is not suit for public trading. If the start-ups are looking to rise funding, then you can apply for this type of legal structure.
Business raising Funding
Funding is the main bloodstream of any business. Without funding we cannot able to run the business. The fast growing business which needs the funding from venture capitalists need to incorporate private limited company.
This is mainly because these form of business only offer shareholders and offer the seta for directors.
The one person entity should not adopt any additional shareholders and the LLP requires investors to be partners.
The public company can rise the funding easily by issuing the privacy to the publics. But in case of private limited company it is not easy to rise the funding. The private company bar the invitation to the public and the maximum amount of numbers are limited.
The private limited company need to meet the requirements of the Ministry of corporate affairs to get the affluent of funding. Thus by accepting the demanding of MCA, the company can easily get the funding convenience. These demands are ranging from the annual auditing, filing with RoC, ITR filing, board meetings, reporting the minutes of meeting etc. You have to wait until the business meets these requirements before jump into the Pvt Ltd registration. When compared with LLP, the requirements and the compliances are fewer and people show their interest to incorporate their business as Limited Liability Partnership.
Generally, the private limited company is considered as its having various tax advantages. But practically it is not. We have to pay the tax as 30 % in flat rate according to the profit, and also want to pay the DDT as does the minimum alternate tax. If you wanted to form the business entity which having less tax rates, then confidently choose LLP. It has some added advantages than other entities.
The cost or the expenditure to start the Pvt Company at the starting level is minimum of Rs.8000. this cost is excluding all the professional charges. States like, Kerala, Punjab, Madhya Pradesh etc charges higher cost to initiate the company. For a private company it needs the minimum of Rs.5000 as paid-up capital and also the annual cost charge Rs.13, 000.
Idiosyncrasies of LLP
LLP is widespread since 2008. It is applicable for the professionals and advisory firms who do not need the equity funding procedures. Limited liability partnership combines the better experience of partnership firms and the Private limited companies. In the above session we talked some points about the Advantages of LLP like tax benefits, compliance requirements etc.
Non scalable business
If you are going to register a business which do not need the equity funding then you can choose the popular form of business form known as Limited liability partnership. It combines the varieties of a private ltd company and as well partnership firm. Like a private company it has limited responsibilities and like the general partnership firm it has less and simpler structure.
The Ministry of corporate affairs have been made some concessions on LLP. For example, the audit requirement is mandatory for LLP only if the turnover is greater than Rs.40 lakh and the paid up capital is more than Rs.25 lakh. Additionally, if there any changes in the structural format of the Pvt Company need to inform it to the RoC. But in case of LLP there is no mandatory condition.
Advantages of Tax
Especially, if your business is earning Rs.1 crore as profit, then you are capable of earning the tax benefits. You can skip the dividend distribution tax also. The partner’s loans are also not taxable as income.
You can have any multiple of numbers as your business partners. There are no restrictions and boundaries in those requirements. How strong the partners are, that is matter. A large advertising agency can have large amount of numbers. LLP is good at this requirement.
To start a private limited company the start-up government cost is Rs.5000. there is no paid up capital to initialize the business and the compliance costs are very less.
Features of an OPC
OPC means one person company. The OPC is not much different than a private limited company. There must be only one director and he can act as the shareholder as well. It is a hybrid structure and combines the advantages and structure of sole proprietorships and a company. OPC is mainly for sole entrepreneurs. If your paid up capital is higher than 50 lakh or revenue exceed Rs.2 crore you have to jump into private limited company incorporation.
Excessive compliance requirements
Though, if there is no board meeting, you have to conduct the audit, annual filing, ITR filing, and other requirements with MCA.
The OPC is having some specific advantages like the private limited company. But the tax rates are at 30% on profits and also have to pay the DDT as does MAT. If you wanted to start the business with low tax rates, then LLP is the best mode of business.
Initial Cost of Business
The initial payment for the OPC is less than Rs.7000. this mode of payment may vary from states to state. For example payment charged in Kerala is totally different in Punjab and that of Madhya Pradesh. Here in these cities the fees are much higher.
Peculiarities of partnership Firm
If you are focusing to start a small business then you can choose this form of business structure. It has less liabilities, debts etc. the partners are having unlimited liabilities and thus are liable for the debts. The partners are liable to pay the debts and fine of the company from his own assets. Additionally, Partnership do not offer any benefit over LLP apart from the ease of structure building and limited liabilities.
Easy and simple to start
If you wanted to choose the partnership firm, all you need and the primary face is to create a partnership deed. Partnership deed can be prepared in just two to four days. Incorporation is simpler and can be done in one day once you got the appointment with the Registrar. The partnership firm incorporation is simpler when compared with the LLP or Private limited company.
Want to register the company which is suited for your business? Don’t worry we Solubilis can assist you in all the registration process. We are having different forms of business which includes OPC Registration, LLP Registration, Private limited company Registration, Public Limited Company Registration etc. our experts team in Coimbatore guide you till you get the Incorporation Certificate. Be free with all your problems, we are here for you.