Will different entities bring any difference to the economy?

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After deciding to start a business the first and foremost thought that comes to mind is how to register a company in India. It is very simple and can be done even through online. But before registering one must make sure about which type does his business fit in. The prime point when starting a business is to decide on which type of business entity you will belong to. There are many types of entities like the Partnership, Proprietorship, Limited Liability Company (LLP), nonprofit and corporation. The business structure’s type depends on many factors like the company’s goal, workforce and so on. Each type of business entities has its own advantages and disadvantages. So choose accordingly as which fits you the best and take the smart move.

The LLP in India merges the advantage of the partnership and the company into the sole form organization. It has many advantages attached to its credit when compared to the partnerships, proprietorships and other companies.

Let’s look at some of the pros and cons of Business Entities and they are as follows.

  • Sole Proprietorship – They are easy to create. The business is owned by the sole owner. There are no fees linked to the business creation and the best part, the owner of the business can claim the loss through personal income taxes. It also has drawbacks like the complete loss is faced only by the owner and also he is responsible for all the business profit’s taxes.
  • General Partnership – Just like the Sole owner, this type is also easy to create and maintain easily. This type also gives the freedom to claim the loss from the income tax. In the case of debt or loss in business, all the owners are accountable for it.
  • Limited Partnership – This is one of the most popular and sought after type as it attracts investors to invest only a portion of the investment. They are entitled to enjoy everything in limited liability and also leave the business without any worry or stress. It is suited more to real estate investment and has limited choices and options.
  • Limited Liability Company (LLC) – They enjoy limited business debts even though they control many parts of the business. They can choose the taxation method for LLC either as a corporate or partnership. The only drawback is that it is expensive compared to other business entities.
  • Regular Corporation – The business owners enjoy limited liability when it comes to debts or loss. But it comes with the complicated paperwork which needs to be filed in the state secretary.

When you are developing a business, you need to consider several things like the profits, division of liability, taxes, control of the business and many more. A deep understanding and complete study are required before getting involved in any of the business entities.

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