Business Solutions

An LLP or Limited Liability Partnership is a business structure more preferred than a general partnership as it ensures limited liability of the partners. It was introduced in 2008 and is governed by The Limited Liability partnership Act, 2008.

The liability of each partner is limited to the capital he/she has contributed. It has all the features of ease and flexibility of a general partnership and provides an improvement in the form of limited liability.

An LLP Agreement must be executed between the partners detailing the name of the LLP, business to be conducted, names and details of each partner along with intimation of who are the designated partners, the profit and loss sharing ratio and retirement and induction process for partners etc.

An LLP must have at least two partners and there is no ceiling on the maximum. One of the partners of the business must be a resident of India. There is no minimum capital required in private limited company and Rs.5 Lakhs in case of a public limited company.

Section 8 Company pertains to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objects , provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

Therefore, Section 8 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.

One Person Company is a private limited company consisting of only one shareholder who is also the director of the company. OPC or One Person Company is an improvement over the traditional structure of sole proprietorship limiting the liability of the person to the total of his/her capital contribution towards the business.

There will be a nominee director who has no power until the original shareholder/director is rendered incapable of running the business eg. Due to death, incapacity of mind etc.

To incorporate an OPC an application must be made to ascertain availability of name of business by applying through Form INC-1. If the desired name is available then such name must be reserved. Within 60 days from such reservation INC-2 form which is the application for incorporation must be submitted.

A general partnership is a business structure wherein two or more persons come together to own and manage a business. The foundation of such a partnership lies in the Partnership deed that incorporates the terms of conducting the partnership business.

The partnership deed details the partner’s responsibilities, ownership interests, profit and loss sharing ratio among partners, nature of business, dispute settlement, dissolution process etc.

A general partnership must have a minimum of two partners. A partnership engaged in banking business can have a maximum of 10 partners while partnerships engaged in any other businesses can have a maximum of 20 partners.

The Partnership Act, 1932 governs such general partnerships in India.

A Partnership does not enjoy the status of separate legal entity independent of the partners. A Partnership business also attracts unlimited liability i.e. if the assets of your business does not compensate your debt then your personal assets will be attached to pay that debt or liability.

A sole proprietorship is a business entity that is owned, managed and controlled by one person. It is one of the most popular forms of business in India, used by small businesses operating in mostly the unorganized sectors. Proprietorship firms are very easy to start and have very minimal regulatory/statutory compliance. A proprietorship firm can be established by getting a tax registration or a license based on the nature of business and there is no specific registration of the ‘proprietorship’ itself.

The liability of each partner is limited to the capital he/she has contributed. It has all the features of ease and flexibility of a general partnership and provides an improvement in the form of limited liability.

An LLP Agreement must be executed between the partners detailing the name of the LLP, business to be conducted, names and details of each partner along with intimation of who are the designated partners, the profit and loss sharing ratio and retirement and induction process for partners etc.

An LLP must have at least two partners and there is no ceiling on the maximum. One of the partners of the business must be a resident of India. There is no minimum capital required in private limited company and Rs.5 Lakhs in case of a public limited company.