PHASE 1

Proprietorship – It is a type of business in which the business is run and managed by a

person and that person who manages the business is termed as proprietor he is liable for all the
decisions in the firm. The firm and the proprietor(owner) are termed as one. It is easy to run
without much complications and also the registration is also easy. Though government has not
made it necessary to get registered as a proprietor but id the firm wants to get benefits or
recognition and wants to open current account under the name of the firm then the registration
is required.

Audit is required only when the sales turnover is more than 1 crore or gross receipts is of
50 lacks.

Process for registration is-

1.Business License – According to the nature of the business License is required for example if
food/restaurant type of business need certificate renewal on the yearly basis by the FSSAI
(food safety and standard authority of India). The license fully depend of the type of business.

2.Tax Registration- Such as GST registration and professional tax registration is required and
to be filled online time to time. For registration of the GST the documents required are

 Identity Proof - Aadhar & PAN Card

 Address Proof - Latest Bank Statement

 Passport size photos

 Rent agreement-if the person is running a firm in the house or have his office in the house on
rent

Income Tax – ITR 3 can be filed by the proprietor as the owner and proprietor is termed as one
hence two different ITR is not needed the owner can file the return as a proprietor.

No other registration is compulsory but if the nature of the business demanded then further
registration can be done such as trademark, patent, and many others.

Advantages of Proprietorship

a. Easy Formation: - A proprietorship business is easy to form where no legal formality

involved in setting up this type of organisation. It is not governed by any specific law.

It only required that the business activity should be lawful and should comply with the

rules and regulations laid by the local authorities.

b. Better Control: - In this business, all the decision relating to business operation are

taken by one person, which makes functioning of business simple and easy. It gives

better control to business.

c. Profit of the Business: - The proprietor is the only person to whom the profit belongs.

There is a direct relation between effort and reward. This motivates him to work hard

and bear the risk of the business

Disadvantages of Proprietorship

a. The amount of capital raised by the proprietor is limited as he’s solely responsible for

arranging the funds.

b. Liability of the proprietor is unlimited and his personal assets can be used to pay off

outstanding debts.

c. There is a lack of managerial expertise on the part of a proprietor as he may not be an

expert in all aspects of management.

LLP (Limited liability Partnership) – As the name tells in the Limited means in the limit
liability i.e. the liability of partners is limited and it depends on the capital invested by the
partners higher there ratio of capital higher is the ownership of the partner minimum there can
be 2 designated partnered and for maximum there is no limit one of the partner should be
resident of India

ADVANTAGES OF LLP

a) Easy to form :- forming an LLP is an easy process. It is less complicated and time

consuming unlike the process of formation of a company.

b) Liability: - The partners of the LLP is having limited liability which means partner are

not liable pay the debts of the company from the personal assets. No partner is

responsible for any other partner’s misconduct.

c) Perpetual Succession : - The life of the LLP is not affected by death, retirement or

insolvency of the partner. The LLP will get wound up only as per provision of the LLP

act.

d) Management of the company: -An LLP has partners, who own and manage the

business. This is different from a private limited company, whose directors may be

different from shareholders.

e) Easy transferability of ownership: -There is no restriction upon joining and leaving

the LLP. It is easy to admit as a partner and to leave the firm or to easily transfer the

ownership to others

DISADVANTAGES OF LLP

a. Restricted Access to Capital Markets: - LLPs are small form of business and cannot

get its shares listed in any stock exchange through initial public offerings. With this

restriction, limited liability partnerships may find it difficult to attract outside investors

to buy the shares.

b. Rights of partners: - An LLP can be structured in such a way that one partner has

more rights than another. So it isn't a one vote per share system. So, some lesser partners
may feel compromised if higher shareholders choose to move the business in a direction

that affects their interests.

c. Public Disclosure of LLP Information: - A LLP must file its Annual Returns,

Financial Statements etc. to the Registrar of LLPs annually. Which become public

document once filed with Registrar of LLPs and may be inspected by general public

including competitors by paying some fees to the Registrar of LLPs. Information

disclosure can make an entity competitively disadvantaged. Competitors - especially

those not required to disclose any documents - can access that information and use it to

improve their own business.

d. Limitations in Formation of LLP: - LLP cannot be formed by a single person. A

nonresident Indian and a Foreign National willing to form a LLP in India must have one

person resident in India to act as Designated Partner. Further FDI in LLP is allowed

only through government route only and that too in those sectors only where 100% FDI

is allowed under automatic route under the FDI Policy. This limitation makes LLP an

unattractive form of business.

e. Offenses and penalties: - Limited Liability Partnership Act, 2008 provides that for

non-compliance on procedural matters such as delay in filing of e-forms, one has to pay

default fee for every day for which the default continues. Such default fee would be

payable at the rate of rupee one hundred per day after the expiry of the date of filling

up to a period of three hundred days. The offense can result in either (i) through

payment of fine or (ii) through payment of fine as well as imprisonment of the offender.
Private Limited (Ltd.) – It is the type of company which is formed under the provision
of companies act 2013 in which number of minimum members are 2 and maximum number of
members are 50. This type of company has Limited liability in which the liability of the
members is limited to the amount or in the ratio in which the members have invested the
money. The advantage of private limited company is that the company can rase the fund
through investors and it is easy for the to raise money through debentures, bonds and in the
form of shares. If the number of share holders are increased from 50 then the limited private
company becomes public company

Procedure to register Private Limited Company

Once a name for the company is decided, the following steps have to be taken by the applicant:

Step 1: Apply for DSC (Digital Signature Certificate) and DIN (Director Identification
Number)

Step 2: Apply for the name availability

Step 3: File the MOA and AOA to register the private limited company

Step 4: Apply for the PAN and TAN of the company

Step 5: Certificate of incorporation will be issued by RoC with PAN and TAN

Step 6: Open a current bank account on the company name.

Examples of some famous private company

 Anand Automotive Pvt Ltd. .
 Hindustan Coca-Cola Beverages Pvt Ltd. .
 Jaquar & Company Pvt Ltd. .
 Kiran Gems Pvt Ltd. .
 Lifestyle International Pvt Ltd. .
 Malabar Gold Pvt Ltd. .
 Mother Dairy Fruit & Vegetable Pvt Ltd.
ADVANTAGES OF PRIVATE LTD. COMPANY

• Separate Legal Entity- A Private Limited Company is a separate legal identity in the court of
the law, meaning assets and liabilities of the business are not the same as the assets and
liabilities of the Directors. Both are counted as different. A Private Limited Company separates
Management and Ownership and thus, managers are responsible for the company’s success and
are also answerable for the company’s loss.

• Limited LiabilityIf the company undergoes financial distress because of whatsoever reasons,
the personal assets of members will not be used to pay the debts of the Company as the liability
of the person is limited.

• Free & Easy transfer of sharesShares of a company limited by shares are transferable by a
shareholder at any other person. The transfer is easy as compared to the transfer of an interest in
a business run as a proprietary concern or a partnership. Filing and signing a share transfer form
and handing over the buyer of the shares along with share certificate can easily transfer shares.
DISVANTAGES OF PRIVATE LIMITED COMPANY

 Owner of the company have limited liabilities i.e. not much risk is involved in the company
 No minimum Capital is required to form a private company limited it can be registered with
the mere sum of 10,000 equity shareholders.
 It helps in building capabilities as it has specific procedure.
 Private company has a uninterrupted existence i.e. the company has a perpetual succussion it
can only be legally dissolved.
 Number of Shareholders can only be 50 members it can not exceeds the number of 50
members.
 In stock exchange it cannot be quoted.
 It restricts the transfer ability of shares by its article.

One Person Company -It is a type of company in which there is only one promoter or one
member and it is owned by only one person only. The Company is regulated under companies
act 2013.the process for apply of one person company is same as the private company but the
difference is in the ownership of the company.
ADVANTAGES OF OPCs
The firm gets legal status by getting registered under one person company.
 Investors can easily be attracted because of the compliances in the company and te
systematic process is there in the company.
 It also have less compliances i.e. no need to get the sign of the company secretary it is
signed by the directors only.
 The minimum authorised capital for one person company is 1,00,000/- but there is no
minimum paid up capital requirement.

DISADVANTAGES OF OPCs

 It is only suitable for small businesses large or big businesses can not be run under this
OPCs
 Further share capital cannot be raised with the share holders as there can be only one
owner/promoter. It is difficult to get the fund in the form of share capital or impossible.

PUBLIC LISTED COMPANY – It is the type of company in which the number of share
holders are minimum 7 and the number of directors required is 3 minimum and a minimum
share capital should be 5,00,000 is required. Most of the public companies are previously
private company in which they were managed by the founders, management or group of
investors. The securities of public company can be traded in the market and can be buy and sell
by the public in there demat and trading accounts.

PROCEDURE FOR THE PUBLIC LISTED COMPANY

Step 1: Digital Signature Certificate (DSC)
Step 2: Director Identification Number (DIN)
Step 3: Registration on the MCA Portal
Step 3: Registration on the MCA Portal
Documents Required for Incorporating a Public Limited Company
 Proof of identity of all the shareholders and directors.
 Proof of address of all the directors and the shareholders.
 PAN number of all the shareholders and directors.
 Utility bill of the proposed office i.e. proposed registered office for the company.
 A NOC (No Objection Certificate) from the landlord where the office of the company will be
situated.
 Director Identification Number (DIN) of all the directors.
 Digital Signature Certificate (DSC) of the directors.
 Memorandum of Association (MOA).
 Articles of association (AOA)
ADVANTAGES OF PUBLIC LISTED COMPANY
 Raising through Public issue of shares.
 Growth and expansion opportunity
 Prestigious profile and confidence
 Transferability of Share

DISADVANTAGES OF PUBLIC COMPANY

 More regulatory requirements

 Higher level of transparency required
 Ownership and control issue
 More vulnerable to take over