Business Entities

• Sole Proprietorship
• Partnership Firm
• Private Limited (Pvt. Ltd.)
• Limited Liability Partnership (LLP)
• One Person Company (OPC)

How to start a Business? Sole Proprietorship vs LLP vs Private Ltd. | Business Basics #1

1.1 Sole Proprietorship

• Open current a/c and start doing business
• Sole Proprietorship is one man entity
• All the liability is on the owner himself, Likewise he takes all the profit and losses himself.
• A sole proprietorship is an unincorporated business with only one owner who pays personal income tax on profits earned
• Sole proprietors report their income and expenses on their personal tax returns and pay income and self-employment taxes on their profits
• Registration
  • No registration
  • 1 govt certificate required for opening GST, Current a/c
  • Current Account
    • Not req if very small business or no online transaction
    • Req if you want to online transaction
• Name
  • Can use any name
• Liability
  • Unlimited liability
• Members
  • Max One Person
• Taxation
  • As individual
  • No Separate PAN
• Suitable For
  • Less capital, lower tax slab
  • Unorganised structure
  • Retail trading, Services, Freelancing, Coaching Classes, Clinic
  • Re-seller
• Compliance
  • Low

Proprietorship Firm Full Details | Proprietorship Business Registration | Business Basics #2

• Document
  1. PAN
  2. Any one Certificate
     • Udyog (MSME) registration
     • SHOP & EST ACT or Factoryregistration
     • GST Certificate
  3. Address proof
• When to take GST
  • Services > 20L
  • Sale of Goods > 40L
• Balance-Sheet & P&L
  • Mandatory: Actual if Turnover > 2Cr
  • Better to maintain - to claim deduction
• Compliance
  • SHOP & EST ACT or Factory Act
  • Professional Tax
  • Labour Welfare Fund
  • ESI: After 10 Employees
  • EPF: After 20 Employees
  • Bonus
  • Gratuity
• Taxation
  • ITR-3 or ITR-4
  • For Business
    • ITR-4 (44AD)
    • Turnover < 2Cr
    • 8% Profit
  • For Profession
    • ITR-4 (44ADA)
    • Turnover < 50L
    • 50% Profit
  • TDS
    • Turnover > 1Cr
• Depreciation
  • Not allowed in 44AD
• Cons
  • No Loan
  • No Big Business
  • Difficult Conversion
  • Owner is fully liable

1.2 Partnership Firm

• When two or more people come together and pool funds to start a business, it’s known as a partnership firm.
• The primary aim of partnership firms is to earn profit.
• Registration
  • Optional - registration under Partnership Act, 1932
  • Partnership DEED/Agreement mandatory
• Name
  • Can use any name
• Liability
  • Unlimited liability
• Members
  • Min 2, Max 20
• Taxation
  • Flat 30%
  • Separate PAN
• Compliance
  • Low

A to Z of Partnership Firm | Registration, Compliances, Partnership deed | Business Basics #3

1.3 Private Limited (Pvt. Ltd.)

• It is a business entity formed under Companies Act, 2013
• Registration
  • Ministry of Corporate Affairs (MCA)
• Name
  • Approved my MCA
  • Suffix added: NAME Pvt. Ltd.
• Liability
  • Limited liability
• Members
  • Min 2 Directors and 2 Shareholders
  • Max 200 Shareholders
• Taxation
  • 22%, 25% or 30% - based on turnover
  • Separate PAN
• Compliance
  • High

Save 2x Tax with HUF | Can HUF Buy & Sell Stocks? Business Basics #4

Ultimate Guide to Private Limited Company w/ @CAAnoopBhatia | Business Basics EP 5

1.4 Limited Liability Partnership (LLP)

• It is a business entity formed under Limited Liability Partnership Act, 2008
• Registration
  • Ministry of Corporate Affairs (MCA)
• Name
  • Approved my MCA
  • Suffix added: NAME LLP
• Liability
  • Limited liability
• Members
  • Min 2 partner, Max unlimited
• Taxation
  • Flat 30%
  • Separate PAN
• Compliance
  • Moderate

1.5 One Person Company (OPC)

• Registration
  • Ministry of Corporate Affairs (MCA)
• Name
  • Approved my MCA
  • Suffix added: NAME OPC Pvt. Ltd.
• Liability
  • Limited liability
• Members
  • 1 Director and 1 Nominee Director
• Taxation
  • 22%, 25% or 30% - based on turnover
  • Separate PAN
• Compliance
  • Moderate

Is “One Person Company” good for small businesses? OPC vs pvt ltd | Business Basics#6

1.6 HUF

Save 2x Tax with HUF | Can HUF Buy & Sell Stocks? Business Basics #4

Download HUF DEED pdf