Success of a business always depends on how one can organise it and pursue it to accomplish the desired goals. A business can be organised in different forms such as Sole Proprietorship, Partnership, Limited Company (One Person Company-OPC, Private Company or Public Limited Company) or Limited Liability Partnership.
While selecting a business organisation, one must have an understanding about the different types of business structures, its merits and demerits, suitability for desired business etc.
In India, there are several forms of business organizations viz, Sole Proprietorship, Partnership Firm, Limited Company and Limited Liability Partnership (LLP).
Basically these organizations are classified into incorporated and unincorporated structures. Company and LLP are the incorporated business organizations and Partnership Firm and Sole Proprietorship are the unincorporated structures. Incorporated business structures are created under respective laws such as Companies Act and LLP Act and will be treated as separate legal entities.
Partnership is created by an agreement between partners and is governed by Partnership Act. It is not mandatory to register a Partnership and even if it is registered under Partnership Act, it does not entitle a corporate entity status. An individual can start a sole proprietorship by opening a bank account with a bank. Sole Proprietorship does not require registration.
Incorporated Business structures have certain advantages over unincorporated business.