Best Business Entity Registration for Software/Apps/Internet/Online Business

In India, everyone wants to do something new with a business idea and start a business without knowing whether that business model is good for there Business/venture/Startup. Around 90% Startup fails in India within 3 years and only 5% survive those have strong Business Idea as well as Business Structure. Today we discussed various Business Model which benefits your Business in the following sense are:-

1. Equity;

2. Investment;

3. Public Issue (Raised funds from General Public);

4. Expansion Limit;

5. Ownership;

6. Legal Status & etc.

PRIVATE LIMITED COMPANY REGISTRATION

  • The private limited company is governed by section 2 (68) of Companies act 2013 and relevant rules.
  • It is a form of Business in which a small group of people manages this type of entity privately without any Public interference.
  • The Document in which the constitution of a private limited company is written is known as "Memorandum of Association (MOA) and Articles of Association (AOA).
  • To form a private limited company the requirement of minimum 2 Directors and 2 Shareholders/Subscribers.
  • The private limited company having a maximum of 200 shareholders as per companies act 2013.
  • The private limited company issued its share through private placements.
  • As on date the incorporation of Private company is hassling free and Having a very low cost of Incorporation.
  • It's not raised fund from the public through public issue or it cannot issue prospectus to the general public.
  • It's cannot be listed on the National Stock Exchange or can't sell its shares to the general public through Stock Exchange Platform.

OPC (ONE PERSON COMPANY) REGISTRATION

  • Section 2 (62) of companies act, 2013 & relevant rules governed the OPC Registration In India.
  • In OPC is a form of business in which one person acts as a promoter, director and also member/shareholder of the company.
  • Its is an extended version or form of sole proprietorship firm in which having the features of a private limited company or Partnership firm with the feauture of Limited Liability.
  • There is no requirement minimum paid-up capital in OPC registration.
  • The company having separate legal entity distinguished its member from the OPC.
  • The OPC required minimum one member and one nominee which is carried out business after deceased of its sole member.
  • It's cannot be listed on the National Stock Exchange or can't sell its shares to the general public through Stock Exchange Platform.
  • The OPC doesn't need to hold Annual General Meeting and having many more exemption in Companies act, 2013.
  • The cost of compliance is too low for OPC registration.
  • It's not raised fund from the public through public issue or it cannot issue prospectus to the general public.
  • OPC has minimum one Director and Maximum 15 directors.
  • The perpetual succession is very low because if the nominee is denied to become a member of the company then it's automatically dissolved.

PUBLIC LIMITED COMPANY REGISTRATION

  • The public limited company is governed by section 2 (37) of Companies act 2013 and relevant rules.
  • The public limited company is used word "LIMITED" at the end of its name. • It's can be listed on the National Stock Exchange or can sell its shares to the general public through Stock Exchange Platform.
  • It's raised fund from the public through public issue or it can issue prospectus to the general public.
  • The Public Limited Company have a minimum of 3 Director and Maximum 15 directors.
  • The public limited company having no maximum limit of shareholders as per companies act 2013.
  • To form a public limited company the requirement of minimum 3 Directors and 7 Shareholders/Subscribers.
  • The public limited company issued its share through private placements as well as a public issue.

LIMITED LIABILITY PARTNERSHIP REGISTRATION

  • It's a form of business, which is governed by the Limited Liability Partnership Act, 2008.
  • LLP having its separate legal entity and its combination of company & Partnership Firm.
  • The Document in which the constitution of LLP is written is known as "LLP Agreement"
  • The LLP having a minimum of 2 partners and there is no limit on maximum partners. • it's can not raise fund from the general public through open offer or prospectus or public issue.
  • The LLP is extended version or form of Partnership firm and having all features of partnership firm except Unlimited Liability, Separate Legal entity & sue or to be sue (LLP sue anyone or to be sue by someone to LLP not its Partners)
  • The word "LLP" is mention at the end of the entity name. if it's registered as LLP.
  • LLP registration is less complex than registration of Partnership firm under the Partnership Act.
  • In LLP one partner is not liable for the actions of other partners (Individual Protection), but in a Partnership firm, its happen (every partner is liable for the actions of other Partners).

CONCLUSION

  • OPC, Proprietorship Firm is best for small business because they have a very low cost of compliance in comparison to other forms of Business but OPC has Limited liability and separate legal status.
  • A private limited company is best for a startup which has an expanding plan don't want to raise fund from General public through public offer or prospectus or Stock exchange and they also want to manage their company privately without any Public Interference.
  • LLP is the business form having features of a private company as well as a partnership firm and it's used generally by professional (CS, CA, CWA and Doctors etc) and it's easy to dissolve
  • Public Limited Company is used by those businesses who want to raise Fund from the General public through public offer or prospectus or Stock exchange and want to business by engaging a large group of people.

EVERY BUSINESS FORM HAS ITS PROS & CONS. SO, WE NEED TO CHOOSE ENTITY AS PER OVER BUSINESS MODELS.

Last updated:7/22/2019 11:47:32 PM

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