TYPES OF ENTERPRISES

PRABHAKAR BAHUGUNA
CHIEF CONSULTANT, NIESBUD
THE NATIONAL INSTITUTE FOR
ENTREPRENEURSHIP & SMALL BUSINESS
DEVELOPMENT (NIESBUD)
(Ministry of Skill Development and Entrepreneurship, Govt. of India)
 TYPES OF ENTERPRISES
The choice of the business entity is dependent
on various factors such as taxation, owner
liability, compliance burden, investment and
funding and exit strategy.
 TYPES OF LEGAL ENTITY
1 Proprietorship
2 Partnership
3 Private limited company
4 Public limited company
5 Hindu undivided family
6 Joint liability company
7 Self help group
8 One Person Company
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
It can be
registered or Registered with the Registered with the
Registered with the
No formal unregistered Ministry of Corporate Ministry of Corporate
Registrati Ministry of Corporate
registration (Registered Affairs under the Affairs under the
on Affairs under the
Requirement under Limited Liability Companies Act,
Companies Act, 2013.
Partnership Act, Partnership Act, 2008. 2013.
1932)

Name must be Name must be

approved by the approved by the
Name must be
Registrar of Registrar of
approved by the
Company. Only Company. Only
Registrar of Company.
Choice of Name names that are not names that are not
Choice of Name Only names that are
can be used. No identical / similar to an identical / similar to
can be used. No not identical / similar to
approvals existing company or an existing company
Name of approvals required an existing company or
required and it is LLP name and names or LLP name and
the Entity and it is good to LLP name and names
good to avoid that are not offensive names that are not
avoid trademarked that are not offensive or
trademarked or illegal would be offensive or illegal
names illegal would be allowed
names allowed . It must end would be allowed . It
. It must end with end
with end with the must end with end
with the words Private
words “Limited with the words “OPC”
Limited Company
Liability Partnership” or “One Person
or “LLP”. Company”.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company

Private Limited One

Company is a Person Company
separate legal is a separate legal
LLP is a separate
It is not entity registered entity registered
legal entity
recognized as a It is not recognized under the under the
registered under
separate legal as a separate legal Companies Act, Companies Act,
the LLP Act,
Legal entity and the entity and the 2013. The 2013. The
2008. The
Status of promoter promoter Directors and Director and
partners of a LLP
Entity is personally is personally liable Shareholders of Nominee
are not personally
liable for the for the liabilities of a Private Limited Director of a One
liable for the
liabilities of the the Partnership Company are Person Company
liabilities of the
Proprietorship not personally are not personally
LLP.
liable for the liable for the
liabilities of the liabilities of the
Company. Company

Proprietor has Shareholders Director and

Partners have
unlimited liability Partners have have Nominee Director
limited liability
Member and is unlimited liability limited liability have limited liabilit
and is liable only
(s) responsible for all and is responsible and is liable only y and is liable
to the extent of
Liability the liabilities of for all the liabilities to the extent of only to the extent
their contribution
the of the Partnership. their share of his/her share
to the LLP.
Proprietorship. capital. capital.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
A minimum of
A minimum of two persons are
Minimum A minimum of two A minimum of two persons are required to start a
Have only one
Number persons are two persons are required to start One Person
person as
of required to start a required to start a Private Company, viz.
member.
Members Partnership. a LLP. Limited Director and
Company. Nominee
Director.
A One Person
Company can
Maximum Maximum of
Can have only Maximum number Have unlimited have only two
Number 200
one person as of partners can be number of people, viz.
of shareholders or
member. only 20. Partners. Director and
Members members.
Nominee
Director.
Foreigners are
Foreigners are
allowed to invest
allowed to
in a LLP only
Foreigners are invest in a Director and
Foreign Foreigners are not with prior
not allowed to Private Limited Nominee Director
Ownershi allowed to start a approval of RBI
start a Company under cannot be
p Partnership. and Foreign
Proprietorship. the Automatic Foreigners.
Investment
Approval route
Promotion Board
in most sectors.
(FIPB) approval.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
Ownership can
Transfera Ownership can be transferred Ownership can
Not transferable Not transferable.
bility be transferred. by way of share be transferred
transfer.

Existence of a Existence of a
Existence of a
Private Limited One
Existence of a LLP is not
Company is not Person Company
Partnership dependent on
Existence of dependent on is not dependent
Existence business is the Partners.
a Proprietorship the Directors or on the Director or
or dependent on the Could be
business is Shareholders. Nominee
Survivabil Partners. Could be dissolved only
dependent on the Could be Director. Could
ity up for dissolution voluntarily or by
Proprietor dissolved only be dissolved only
due to death of a an Order of the
voluntarily or by voluntarily or by
Partner. Company Law
Regulatory Regulatory
Board.
Authorities Authorities.

Private Limited
One Person
Taxed as Partnership LLP profits Company
Company profits
individual, based profits are taxed at are taxed at 30% profits are taxed
are taxed at 30%
Taxation on the total 30% plus plus surcharge at 30% plus
plus surcharge
income of the surcharge and and cess as surcharge and
and cess as
Proprietor cess as applicable. applicable. cess as
applicable.
applicable.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company

No No Board and
No requirements No requirements
Annual requirements to requirements to General
to conduct annual to conduct
Statutory conduct annual conduct annual Meetings must
statutory annual statutory
Meetings statutory statutory be conducted
meetings. meetings.
meetings meetings. periodically.

Must file
No Annual Must file Annual
Must file Annual
requirements to Accounts and Accounts and
No requirements Statement of
file annual Annual Return Annual Return
to file annual Accounts
report with with the with the
report with & Solvency and
Registrar of Registrar of Registrar of
Registrar of Annual Return
Annual Companies. Companies Companies
Companies. with the
Filings Income Tax each year. each year.
Income Tax Registrar each
Return must be Income Tax Income Tax
Return must be year. Income
filed based on Return must Return must
filed for the Tax Return
the income of also be filed for also be filed for
Partnership. must also be
the the Private the One Person
filed for the LLP.
Proprietorship. Limited Company.
Company.