India is a country with a population of 1.3 billion people, and it is termed as an emerging market for every product and service sold by corporations around the globe. India is a country whose foundation was built on the pillars of sovereignties, sociality, secularism and democracy and it will always provide immense opportunities for doing business, business is a business that will never face recession.

This pace at which our economy is growing, it is expected that India will soon bea heaven for launching new businesses. India hasa history that relates to people doing businesseseven when the world at large was busy establishing a civil administration in their countries. Anecdotes of handloom factories had been the case to study for not just Indians but also for students abroad.

The change in government policies and the implementation of those policies as per their ideologies, rooting towards the development of the country, was all directed to grow and attain an economy based onbusiness expansion in India. With launching various schemes and credit policies the government is trying to push people to start a new business, which in turn will not only help the government but will also create employment opportunities for the public at large, making it a vehicle for not just economic but for the overall development of the Indian society. India, though in its later development stage realized the complication faced by people for doing business, has launched various schemes to provide aid in catalyzing the process of incorporation of abusiness.

Such schemes as explained below in this research  paper will give you a brief view of the endeavours by the Indian government towards business development in India.In terms of the statistical data India has jumped to number 30 in terms of doing business as per the ranking provided by the World Bank. It is also listed in top 100 companies among the rankings provided.A recent change inthe indirect taxation structure by creating a single unified indirect tax system enhanced the viability of business entities that makes it attractive for new entrepreneurs to introduce a business unit in India. Introduction of Insolvency and Bankruptcy Code is an effort made to resolve the complication on stressed assets which were causing complications in the functioning of a business process. Digital interference was a step ahead to provide a platform for covering the preliminary aspect of the business that eliminates the age-old process by bureaucrats, making it less in terms of physical interactionwhich provides more transparency in affairs of doing business.

There are various rules and regulations as per the Companies Act that needs to be followed by a person who wants to register a public limited company; following are the rules:

1. Minimum Shareholder

A minimum number of the seven shareholders are required to form a public limited company.

2. Minimum Director

A minimum number of three directors are required for the purpose of the registration of a public limited company.

3. Minimum Capital

A minimum capital of rupees five lakh is required; there is no cap limit on the capital investment.

4. Digital Signature Certificate

A Digital Signature certificate from one of the director is required at the time of submitting the self-attested copies of address proof and identity proof of other directors and people associated with the company.

5. Director Identification Number

Every director who accepts the proposal to be the director of the company shall have a director identification number for the registering as a director during the registration of the company.

6. Application for Name

An application has to be made by the promoters of the company for the name under which the company is going to be registered and the name which is going to be promoted to the world at large.

7. Object clause

A company needs to add the object clause in the charter document of the company stating the object of the company along with the purpose for which the company was incorporated. Every company incorporated under the companies act should have the charter document known as Memorandum of Association.

8. Documents submission and payment of fees

A set of documents such as Memorandum of Association, Articles of Association, DIR 12, INC-7 and all other related documents prescribed by the Act need to be submitted along with prescribed non-refundable fees for completing the registration process.

9. Application for Business Commencement

After receiving the consent or in-principal approval after a thorough examination of documents submitted by ROC, the company has to apply for the certificate of commencement.

Directors who are Indian nationals accepting the proposal for being a director in the company should have the following document as a prerequisite condition for employment in the company:

1. Pan Card- A copy of pan card should be submitted by the director of the company for the process of incorporation. A pan card is a document containing a unique identification number provided by the department of income tax, which eventually forms a core document for the process.

2. Address Proof - Every director employable in the company has provided with an address proof that will form a part in proving the Indian Nationality of such director. Following is the list of the documentation required as address proof:

1. Passport
2. Election Card or Voter Identity Card
3. Ration card
4. Driving License
5. Electricity Bill
6. Telephone Bill
7. Aadhaar Card

3. Residential Proof- A residential as an additional proof should be submitted with address proof, to confirm the current address of the director. Following is the list of the documents to be submitted as the residential proof:

1. Bank Statement.
2. Electricity Bill.
3. Telephone Bill.
4. Mobile Bill.

4. Registered office proof - Along with the Pan cards address proof and residential proof, a proof of registered address of the company should be submitted for completion of the process of incorporation. Following are the document to be submitted as proof of the registered office of the company:

Registered document of title of the premises of the registered office of the company in the name of the company.

Or

A notarized copy of rent or lease agreement of the registered office of the company along with the rent paid receipt, which should not be more than one month old.

5. Shareholder’s details - Every company needs to submit the details regarding the shareholder subscribing to the Memorandum of the company, with the similar documents provided by the directors, i.e. pan card, aadhaar card, identity proof and residential proof.

If the shareholder is a judicial person and not a natural person such personality should submit a notarized copy of documents such as INC-9, MOA, AOA drafted by the  professionals along with the mentioned documents a copy of the certificate of incorporation and a copy of board resolution passed stating the subscription to share of the company.

A name of the entity should always be registered, but before registration director/ directors or promoter/ promoters should decide the name that is going to reflect in books/ register of ROC at the time applying for incorporation. A name should be divided between three parts 1) Name 2) Object 3) Constitution. Name of the company will be unique name decided by the promoters and directors and object will the reason/ purpose for which a company is incorporated and constitution will manifest what the company is registered for, for example, private limited, public limited, limited liability partnership, limited liability company, etc.

A collective amount invested by people at times of incorporation for carrying out the affairs of the company is known as the capital of a company. Capital is usually divided between two parts “Authorized capital” and “Paid-up capital”.

Authorized Capital means the amount of capital authorized by the act after making an application in this behalf by the promoters.

Paid-up capital is an actual amount of money invested by the shareholder/ pre-issue shareholder / promoters in the company as to limit/ authorized capital.

A person willing to launch a business in India has various option to start a business;they are as follows:

1. Private Limited Company

In the Private Limited Company, personal assets are different from business assets. Every shareholder is responsible for his share of the total capital. Private Ltd Companies need to maintain the records of financial transactions, board meetings, annual reports and so on.

A Private Ltd company consists of a shareholder, whereas the total capital of the entity is made up of shares. The shares can be sold or transferred to another individual who then becomes one of the owners of the company.

2. Partnership

Partnership business entities are similar to a sole proprietorship. The main difference between partnership and sole proprietorship is that two or more members are necessary to form a partnership. The responsibilities, roles and the share of the partners are always defined in an executed partnership deed.

Examples of partnership firm are as follows:

1. Twitter: It is founded by Evan Williams, Biz Stone, and Jack Dorsey and is an outstanding example of prosperous business partnership.
2. Google: The founders of the google, namely Sergey Brin and Larry Page, ran a small search engine decade ago and turned it into the leading search engine in the entire world.

3. Limited Liability Partnership

A limited Liability Partnership firm is unlikethe partnership firm as personal assets are different from the business assets. In case if the business incurs any damages, the personal assets of partners are not at risk, as share capital in an entity that defines the maximum liability of every partner.

As compared to Sole Proprietorship and Partnership, Limited Liability Companies always has good credibility among the investors. The primary reason includes the maintenance of incorporation, tax and financial records.

4. Sole Proprietorship

A company registered in the name of a single person is called Sole Proprietorship. That sole person is wholly responsible for the welfare of the entire business. The owner funds the business, takes the profits and bear the losses.

Do you know that companies like Coca-Cola, Apple, Hewlett-Packards, Amazon, etc. all started their company as Sole Proprietorship companies in India.

5. One Person Company

One Person Company (OPC) is a newly proposed type of company and is introduced in the Companies Act, 2013 in order to support entrepreneurs who are capable of starting a venture by allowing them to create the entity by an individual. The main advantage of an OPC is that only one individual can start the company, whereas,in case of Limited Liability Partnership, minimum two members are necessary for incorporation and maintenance.

An OPC is a separate legal entity as per company which offers limited liability protection to its shareholders and has continuity of business and is accessible to incorporate.

6. Section 8, a Company:

According to Section 8, a company is an organization which is registered as a Non-Profit Organization (NPO). NPO/company has its objective of promotion of arts, commerce, charity, education, protection of the environment, science, social welfare, sports, researchand intends to apply its profits, if any, or other income in promoting its objects.

GST (Goods & Service) Tax is the biggest tax reform that took place in India catalyzed the business process in the country. A unified tax system is launched by the government, where tax applicable would differ on the basis of the good and services, the government has eliminated all other complications as compared to previous tax structure, i.e. value-added tax and service tax. Every business is compelled to register under the new tax system in both cases, either the business being of goods seller or service provider. There are some mandatory compliances for all the businesses in the country, avoiding which may attract a penalty.

Eligibility for registration under GST

Service provider: - Any person providing services in the aggregated value of “twenty lakhs” rupees for a period of one year needs to obtain GST registration. In some special categories, a service provider providing his services for an aggregate value of “Ten lakhs” rupees in a year should obtain GST registration.

Goods Supplier: -Any supplier supplying goods of the value aggregate of rupees “Forty Lakhs” should obtain GST registration. For any person to be eligible for the privilege of “forty lakh” benefits need to comply with the condition mentioned as per the GST rules. Any person other than the person eligible for the forty lakh benefit should obtain registration once he/she sells the goods aggregating “twenty lakhs” and in some special category, the aggregate amounts is “ten lakhs” rupees.

1. Pan card of the applicant willing to register/ obtain the GST registration.
2. Any proof of business registration or certificate of incorporation.
3. Identity and address proof of promoters with photographs.
4. Address proof of the business place or proof of the registered office of the company.
5. A bank account statement viewingthe name, address and a few transactions.
6. Class 2, digital signature for the authorized signatory.

Trademark

It is a mark capable of distinguishing the goods or services in connection with which it is used in the course of trade in respect of origin, material, mode of manufacture of goods or performance of service quality, accuracy or other characteristics of goods or services not so certified or registrable a such under chapter IX of those goods or services in the name, as proprietor of the certification trademark, of that person.

For any company which expects an authority under Trademark Act, 1999 to protect its distinct products and services from other companies needs to register their logo, signboard or any other distinct symbol under the Trademark Act, 1999.

Patent

A patent is essential to a company because it can help to safeguard one’s invention, innovation or an idea. It can protect any product, design or process that meets certain specifications based on its originality, practicality, suitability, and utility.

Copyright

Copyright is a right given to the creators of literary,  dramatic, musical and several other works of the intellect. It usually means that only the creator has the right to make copies of his or her actions or prevents others from making copies. The central idea behind such protection is the premise that innovations require incentives. Copyright recognises this need and gives it a legal sanction. Copyright protects all of them.

While corruption still exixts, digitalization and computerization of various departments has led to more efficacy in their working. Business institutitons like SEBI and RBI have become more vigilant and proactive in dealing with domestic and foreign investment.

Since decades india has been a semi-socialist state and although it still has a long way to go, India will continue to be an atteactive destination for business and investment.

A Company can be defined as an association which is formed by natural persons, legal entities or mixture between the two and the main purpose of the company is to develop commercial activities under the Indian Companies Act, 2013. The term ‘Company’ is defined by various legal experts. Section 2(20) of the Companies Act, 2013, defines the ‘Company' as follows: "Company means a company incorporated under this Act or under any previous company law."

1. Private Limited Company

In the Private Limited Company, personal assets are different from business assets. Every shareholder is responsible for his share of the total capital. Private Ltd Companies need to maintain the records of financial transactions, board meetings, annual reports and so on.

A Private Ltd company consists of a shareholder, wherein the total capital of an entity is made of shares. The shares can be sold or transferred to another individual who then becomes one of the owners of the company.

Private Limited Company consists of three types:

i) Company limited by shares: The company where the members are having its limited liability by the memorandum, if any, unpaid by the members.

ii) Company limited by guarantee: It is a company consisting of limited liability of its members by the memorandum to such amount as the members may respectively undertake to contribute the assets of the company in the event of its winding-up.

iii) Unlimited company: A company that has no limit on the liability of its members is called as an unlimited company.

Here are a few examples of the private limited Companies: Flipkart, Parle, Snapdeal, Pepsi, Book my Show, etc.

2. Partnership

Partnership business entities are similar to a sole proprietorship. The main difference between a partnership and sole proprietorship is that two or more members are necessary to form a partnership whereas you need only one proprietor for a sole proprietorship. The responsibilities, roles and the share of the partners are always defined in the executed partnership deed.

The profit-sharing ratio is defined by the partners in their partnership deed. In the case, if any loss incurs, each of the partners is responsible personally. Personal assets of partners can be used to compensate the losses incurred if any as decided by the partners.

Examples of a partnership firm are as follows:

1. Twitter: It was founded by Evan Williams, Biz Stone, and Jack Dorsey and is an outstanding example of prosperous business partnership.
2. Google: The founders of the google, namely Sergey Brin and Larry Page, ran a small search engine decade ago and turned it into the leading search engine in the entire world.

3. Limited Liability Partnership

A limited Liability Partnership firm is different from the partnership firm as the personal assets are different from the business assets. In case if the business incurs any damages, the personal assets of partners are not at risk, as the share capital in entity defines the maximum liability of every partner.

As compared to Sole Proprietorship and Partnership, Limited Liability Companies always has good credibility among the investors. The basic reason includes the maintenance of incorporation, tax and financial records.

4. Sole Proprietorship

A company registered in the name of a single person is called Sole Proprietorship. That sole person is wholly responsible for the welfare of the entire business. The owner funds the business takes the profits and bear the losses.

Do you know that companies like Coca-Cola, Apple, Hewlett-Packards, Amazon, etc. all started their company as Sole Proprietorship companies in India?

5. One Person Company

One Person Company (OPC) is a newly proposed type of company and is introduced in the Companies Act, 2013 in order to support entrepreneurs who are capable of starting a venture by allowing them to create the entity by an individual. The main advantage of an OPC is that only one individual can start the company, whereas, in the case of Limited Liability Partnership, a minimum of two members is required for incorporation and maintenance.

An OPC is a separate legal entity as per company which offers limited liability protection to its shareholders and has continuity of business and is accessible to incorporate.

6. Section 8, an NPO Company

According to Section 8, a company is an organization which is registered as a Non-Profit Organization (NPO). NPO Company has its objective of promoting arts, commerce, charity, education, protection of the environment, science, social welfare, sports, research, and different religion. It intends to apply its profits, if any, or any other income in promoting its objects.

It is fairly advisable to choose the legal structure appropriate for the business as it will not only attract liability to choices but also will require the legal documenting as per the perquisites mentioned by the Companies Act, 2013 for the registration of the entity under different forms. The entity is constructed of different forms of organizational headings under which a person willing to open the business can register for carrying out the activity.

There are risks associated with the type of business a person would wish to register himself. Applicable taxes for different organizations are different, so choosing one’s business wrongly may lead to attracting that sort of tax liability. Also, a person has to raise funds required for establishing/ registering the business as to what he/she chooses.

For the formation of entities and registering as per the requirements, one needs to file various documents and has to meet the deadlines prescribed by the law regarding personnel, duration and capital that is required for such registration.

Considering the various laws enacted for different purpose of regulating different types of business, it is important for a person to choose the correct structure for himself in recognizing the law applicable for such business and to avoid violation of the provisions attracting penalty under each head.

Such individual incorporating the business needs to make a choice under which industry he/she is expecting to carry out the activity. For the smooth functioning of business, it is important to maintain a structure that suits the demand and provides the desired results. The correct structure will also give legal protection against the world.

A Company is a legal entity formed by a group of individuals to engage in and operate a commercial business or an industrial enterprise. A company includes not just employees and employers but also includes shareholders, partners andsuch other decision makers. As the exponential growth in the corporate market has taken place, there’s a growing number of people’s involvement, for the purpose of wealth maximization. A company has to register to give a legal identity to its existence in order to receive the full benefits provided by the legislation on this behalf.

Companies Act, 2013 is the recent Act regulating corporate affairs in India. India being a population of 1.3 billion people out of which some form a company and some work for a company, it was important to invent rules for a company to work in the paramount interest of people at large. A public limited company works in a combination of people outside of the company as well as people operating from the inside of the company.

Difference between owners and directors

A company registered under the Companies Act has made a clear distinction between the people who own the company and the people who administer the company. The company is formed by collective units which are owned by people who purchase that part of the company with their money; such unit is known as Share, the person who owns the shares is known as a Shareholder and the price for which he purchases the share is known as the share price. The person who administers the business is known as the directors of the company.

Limited Liability

Every company that is formed as a public limited company under the Companies Act is inclusive of limited liability feature that states that a person who invests in the company via shares should have his/her liability limited to the unpaid value of the share price. Liability of the company will not be borne by the owner of the share.

Separate Existence

A Company registered under the Companies Act will always have separate existence in terms of its member/ owners or any other person associated with the company. A company after registration becomes a legal entity in the eye of the law. Every person associated with the company will not be liable for any act except as stated by law.

Paid Up Capital

Every company under the Companies Act is formed by the collective amount of money introduced and invested by the people buying shares of the company. The amount invested by the people against this share in a company is collectively called as paid-up capital of the company.

Prospectus

A prospectus is the document of the company which is similar to an offer letter for the parties who intend to invest in the share capital of the company or intend to become a shareholder in the company. Prospectus of the company should mention all the necessary requirement as pescribed by  the companies act, failing which may attract a penalty.

Name

As after registration a company is formed as a separate entity it has to register or make an application for registration under a name. The authority under Companies Act has to check the availability for a name for which a company had applied.

Separate Property

A company is a separate legal entity and hence can acquire any property under its own name and no person associated with the company can claim the company’s property to be his property.

Transferability of Shares

Shares are a unit of the share capital of the company is of transferable nature, a person owing a share of the company can sell his share to any other eligible person as per the procedure mentioned in the act.

Can be sued in own name

A company as a separate person can sue any other person or can be sued in its own name.

Common Seal

A company for affixing or affirming any contract or agreement or transaction conducting its name uses a common seal. A common seal is a type of signature of the company used for entering into a contract in the name of the company.

There are various rules and regulations as per the Companies Act that needs to be followed by a person who wants to register a public limited company following are the rules that are a prerequisite for registration:

Minimum Shareholder

A minimum number of seven shareholders are required to form a public limited company.

Minimum Director

A minimum number of three directors are required for the purpose of the registration of a public limited company.

Minimum Capital

A minimum capital of rupees five lakh is required; there is no cap limit on the capital investment.

Digital Signature Certificate

A digital signature certificate from one of the director is required at the time submitting the self-attested copies of address proof and identity proofs of other directors and people associated with the company.

Director Identification Number

Every director who accepts the proposal to be the director of the company requires a director identification number.

Application for Name

An application has to be made by the promoters of the company for the name under which the company is going to be registered and the name which is going to be promoted in the market.

Object clause

A company needs to add the object clause in the charter document of the company stating the object of the company, the purpose for which the company was incorporated. Every company incorporated under the companies act should have the charter document known as Memorandum of Company.

Document submission and payment of fees

A set of documents such Memorandum of Association, Articles of Association. DIR 12 and INC-7 and all other documents prescribed by the Act need to be submitted along with the prescribed non-refundable fees for completing the registration process.

Application for Business Commencement

After receiving the consent or in-principal approval after a thorough examination of documents submitted by ROC, the company has to apply for the certificate of commencement.

Being a public limited company, it is able to offer its share to the public; this provides an opportunity for the company in having better access to capital. With all the privileges and exemption provided by the legislature, it is always better to choose a public limited company for setting up the business. A public limited company with an interest of the public in its working helps the promoters for their value maximization. As with humongous area of working, a public limited company is always governed by the corporate laws of the country, providing a safe environment to its stakeholders. With a huge capital, significant expansion and immense capability of creating employment, this form of business is appropriate for helping the country to shape its economy.

In India, Private Limited company is the most prevalent type of corporate legal entity. It is a business entity held by small groups. A private limited company is always registered for the pre-defined objects and owned by the members called as shareholders. Start-ups and business with the higher growth of aspiration mostly choose Private Company as a suitable business structure.

The registration of the Private Limited Company is governed by the Companies Act, 2013, along with Companies Incorporation Rules, 2014. The governing body of private limited Company is the Ministry of Corporate Affairs, known as MCA. A Private Limited Company is as a company having a minimum paid-up capital which restricts the right to transfer its shares, limits the number of members to two hundred as opposed to the previous fifty and inherits the prohibition to invite the public to subscribe for any securities of the Company.

Shareholders of the company are known as members, whereina minimum of two members are required to form the company. An individual or a body corporate can be a member of a Company.

In order to calculate the number of members in the company, the following shall be considered:

1. If two or more persons jointly hold shares in one company, they shall be considered as one shareholder.
2. The persons who are the employee of the Company and the person who has been an employee of the company were the members of the company before ceasing the employment shall not be included in the number of members.
3. ESOP provides equities to a person in the employment of the Company(Employee Stock Ownership Plan generally known as ESOP is the benefits plan for employees that provide workers ownership interest in the Company).

The MCA has established easy steps to incorporate the company by rolling various changes in the process of registration. The major changes implemented by MCA pertaining to the registration of Private Limited Company are as follows:

Approval of Name of Company in the form of RUN (Reserve Unique Name)

The incorporation of Company shall be initiated by reserving its unique name with prior approval or by using SPICE form. The incorporation certificate is provided if the name of the company is acceptable by MCA. SPIC stands for Simplified Per Forma for Incorporating Company Electronically. MCA introduced RUN Form to reserve the name of incorporating companies.  The requested name would be checked by MCA personnel at Central Registration Centre against the companies, LLP and trademarks to avoid similarities. If the name is unique it will be approved by MCA and the applicant would be intimated via email.

Digital Signature of the Company:

Digital Signature must be obtained for the directors and is required for signing the Incorporation Application. However, it is not mandatory for the approval of the name of the company.

Director Identification Number:

It is mandatory to have Director Identification Number by the director of the Company, which is commonly known as DIN. The DIN could be obtained by any person filing form of DIR-3 or through the SPICE Form.

1. Form of DIR-3:

As per the registry of MCA, Form of DIR-3 can be used only by the existing companies for adding the new director of the company. The DIR-3 Form has included the provisions requesting CIN (Corporate Identification Number) of the Company to which director would be added.

2. SPICE:

A person who is willing to incorporate a new company can apply for DIN by SPICE Form where details of directors must be filled along with PAN or Passport details.

No Incorporation Fee:

The MCA in an effort to simplify the process of registration of Company and encourage the Start-ups has announced zero fees for the incorporation of Companies.

MOA and AOA:

MOA is the document containing all fundamental information required for the incorporation of the company. It is a document which is considered as the draft prepared by the company validated by law for its functioning in successful form. Some important clauses to be included in MOA are the name clause, subject clause, clause mentioning the registered office of the company, liability clause, capital Clause, etc. MOA is a mandatory document to be filed with ROC (Registrar of Companies) at the time of Incorporation.

AOA is the draft which includes the rules and regulations to be followed by the Company; it also contains the layout of internal management of the Company. AOA includes the allocation of shares, Intellectual property rights, division of profits, alteration of capital, the procedure to held general meetings, borrowing powers, dissolution of the company, etc.

Incorporation Certificate:

After MCA approves the MOA and AOA of the company, the company gets the Incorporation Certificate, including the date of incorporation and PAN number of the Company.

The limitation to a private limited company is to issue the shares as it restricts the same to its members, unlike Public Limited Companies. The private Limited Companies can take loans from the Shareholders and Directors, whereas Public Limited Companies can issue its shares to the public. Also, the shortcoming of Public Limited Company is that it has more compliance as compared to sole proprietorship or LLP.

The mandatory Compliances to be made by the private Limited Companies include the following:

1. Allotment of Securities as each member or subscriber to MOA should deposit the subscription money for shares and the company should deliver certificates of all securities post-incorporation.
2. Filing an Annual Return and Financial Statements of holding Annual general meeting.
3. Appointing the Auditor and maintaining the statutory audit of accounts to be conducted by appointing statutory auditors for the company.
4. Private Limited Company should held atleast four board meetings in a year where the presence of director is important for meeting along with proper quorum.  It is necessary to prepare and maintain the minutes to be preserved at the Registered Office of the Company.
5. Appointment of Managing Director and Resignation of Director,
6. Allotment and Transfer of Shares along with receipt of Share application money.

Private Limited Company is the preferred structure by start-ups due to the growing opportunities and stability.

1. Private Limited Company assures the separate entity and legal existence from the members of the company
2. It can get involved in contracts and legal proceedings
3. Change in members and management does not affect the status of the Company.
4. It eases the funding process by offering variours equity options and debt instruments to the promoters and the investors.
5. Private Limited Company has a Separate Managerial Board where the Board of Directors works on remuneration and members receive profit-sharing in the form of a dividend.
6. It can take benefit of registration under Startup Scheme laid by Government as this scheme avails the benefits including exemptions in taxes.

Limited Liability Partnership (LLP) is a form of alternative corporate business which provides flexibility as that of a partnership and the benefits of limited liability of a company.Limited Liability is the type of legal structure where the corporate loss will not exceed the amount invested in the business. It means the assets imputed cannot be seized to repay debts attributed to the company. LLP can continue their existence even after a change in partners. It is capable of entering into contracts and holding property in its name.

Also, LLP is a separate legal entity and is liable to the full extent of its assets. The accountability of partners is limited to their agreed contribution in an LLP.Further, no partner is responsible on account of the individualistic or un-authorised actions of other partners; thus, individual partners are protected from joint liability for wrongful decisions or conduct of another partner’s.The LLP, however, is not released of the liability for its other obligations as a separate entity.

The concept of LLP was initially introducedin 1957. The suggestion was that the limited liability of partnership should be recognized in India either by enacting a special act or inserting new clauses in the existing Partnership Act. However, this suggestion was rejected by the Commission. In 2003, while discussing the regulation of private companies and partnership, the Naresh Chandra Committee stressed on the need for limited liability partnerships in India.

After several suggestions and recommendations, the bill of LLP received the President's assent  toenforce the LLP Act  Hence, the formation and the regulation of LLP is  governed by the Limited Liability Partnership Act, 2008 and Limited Liability Partnership rules, 2009.

The need for the LLP Act was introduced by realizing the growth of the Indian Economy and the role played by entrepreneurs and professionals of our country. The combination of the initiative of entrepreneurship to operate in a flexible, innovative and effectivemanner provide a further impetus to the economic growth of India. The need forestablishing a new corporate form was felt, that could provide an alternative to the traditional partnership practice with unlimited liability.

The structure of anLLP has proven advantageous providing professional services with utmost productivity. Nowadays, India is attracting FDI in entrepreneurial projects carried in the format of LLP, which encourages the small entrepreneurs to explore business with foreign investments. The structure where the different members are willing to start a business by controlling certain segments and further bear their responsibilities can conveniently use the LLP structure.

By following the provisions specified in the Limited Liability Partnership Act, 2008, LLPs should be registered under the provisions of the Companies Act, 2013with the Registrar of Companies (ROC) and all LLPs shall have their registered office. An Incorporation Document supported by at least two partners shall have to be filed with the Registrar in a prescribed form. Contents of LLP Agreement, as may be specified, shall also be required to be filed with Registrar, online. Also, the contents of LLP Agreement or any changes made therein, if any, may be filed in Form 3 and details of partners/designated partners may be filed in Form 4 in accordance with LLP Rules, 2009.

As per provisions of the Limited Liability Partnership Act, 2008, the inadequacy of agreement relating to any matter, the liabilities and mutual rights shall be provided under the Act. Therefore, if any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it will have to enter into an LLP Agreement, explicitly mentioning the excluding applicability of any or all paragraphs of Schedule I.

The primary function of anLLP isthe form of organizing and operating on the basis of agreements executed by the parties. It provides flexibility without imposing detailed legal requirements. The flexibility and uniqueness have helped many entrepreneurs to take benefit of its inherent positive approach. An LLP has few compliances to be followed as compared to the requirements of the Private Limited Companies in India. It is a body corporate with a separate legal entity.

It is generally considered thatLLP has become a boon as it can be formed for any type of business. Also, the Foreign Direct Investment is allowed under LLP but with the specific approval from the government.  It is recognized as the legal form in the manufacturing sector, because of which many small and medium enterprises enjoy the advantage of fewercompliances with higher access in the market.

LLPs have restricted access to Capital Markets as they area small form of business and cannot get its shares listed on 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. Also, LLPs do not have the concept of equity or shareholding like a company. Most LLPs have to rely on funding from promoters and debt funding.

Recently, there is a noticeable increase in the number of entrepreneurs opting an LLP for their start-ups. There are numerous reasons for such trends:

• Low formation cost.
• Restriction and compliances.
• The flexibility offeredas compared to other business structures.
• An LLP can enter into a contract and own properties.
• It has perpetual Succession similar to the company (change in partners does not change the legal status of LLP).
• The creditors of LLP cannot claim the personal assetsof the partners in case LLP is liable for debts.
• There is no limit for the maximum number of partners in LLP, which increases the possibility of  more investors in the company.

Start-ups should make a decision based on their long term objectivity. In LLP, the designated partners have the right to manage the business directly, unlike companies. LLP is suitable for start-ups where the business is to be handled by afew partners who contributed for the formation of an LLP and are drawing similar salaries.

Start-ups with LLP fulfils the objective of the founder to have direct control over the business affairs of the Company.

In India, Partnership Firms are the most favoured form of business. When two or more individuals come together for operating a business with a common intention to earn profits, they start a partnership firm. It is necessary thatminimumtwo persons come along as a single entity to form a partnership firm. The partners agree to share the profit as well as losses in the predetermined ratio or equal ratio. All Partnership firms are governed under Indian Partnership Act, 1932.

The registration of Partnership Firm should be voluntary and as per the guidelines provided under the Indian Partnership Act, 1932. However, the registration allows higher creditability along with the ease of expansion or conversion of business at a future date.

The Partnership Firm is registered with the Registrar of Firm (ROF). The registration procedure of partnership firms varies from state to state. Moreover, the timetaken for issuing a registration certificate varies.

Formation of the Firm - Registration of Partnership firm is done under the Partnership Act, 1932. The partnership comes into existence when an agreement includes such terms and conditions, rules and regulation for the formation of the partnership.

Liability - The partners have to bear unlimited liability in a partnership. It means that the partners may use their assets for paying the debts and dues of the company.

Members - Minimum number of members required to start a partnership firm is 2, and the maximum number is 20, and in case of the banking industry, the maximum number is 10. According to the new Companies Act, 2013, the maximum number of members should not be more than 100 in case of a partnership.

Easy to form - Partnership firms are easy to develop as they exclude many formalities. The registration of the partnership firm is not compulsory, and it can be easily created by executing an agreement.

More capital - As the partners can be two or more to form a partnership, the funds raised can be more as compared to sole proprietorship where the amount of capital isrelatively limited.

Sharing of Risk - The risk of loss is shared by every partner as specified in the agreement so that the burden of losses doesn't come on anyone partner.

Secrecy- It is not compulsory for the Partnership firms to publish their accounts which leadto the confidentiality of its operations.

Unlimited liability - The partners of the partnership firm have unlimited liability, and it is one of the significant demerits. It means that the personal assets of the partners can be used for paying the debts of the company.

Lack of continuity - Partnership is discontinued on the death, retirement or insolvency of its partner, resulting into lack of continuity. However, the remaining partners continue the business by executing the new agreement.

Limited resources - The resources of the partnership firm are limited due to the restriction on the number of partners in the partnership firm. Due to which the partnership firms face problems in the expansion of the business.

Conflicts - The conflicts arise due to the difference in opinion that may lead to the dispute between the partners. 

Based on two factors, the partnership is classified;

1. Duration

Partnership at will - The partnership at will can be formed and closed as per the will of partners. It can be continued as long as the partners intend to carry on the business and can end as per the wish of partners.

Particular partnership - Some partners come together and form a partnership for a particular purpose. For, e.g., for constructing a building, the partnership is established, then it is known as a particular partnership.

2. Liability

General partnership - In this type of partnership firm, the liability of partners is unlimited as well as joint. They have the right to take participation in management, and the actions or decisions of the partners that are binding on each other. 

Limited partnership - In this type of partnership, at least one partner has unlimited liability, whereas rest have a limited one. The partner with limited liability has no right to participate in the management. Registration of the limited liability partnership is compulsory.

Registration of the partnership is optional, but if registered, it gives a proof of the firm’s existence. If the firm does not get registered, it is stripped of many benefits. The partners have to face the consequences for the non-registration of a partnership firm.

1. The partner of an unregistered firm will not be able to file a suit against the firm or any partner.
2. The suit against the third party cannot be filed.
3. Also, the firm cannot file a case against any of the partner.

1. PAN card of Partners
2. Copy of Address Proof of Partners
3. Declaration/ Affidavit intending to act as a partner
4. Partnership Deed (Original) signed by all the Partners
5. Lease or Rental Agreement of the Business Place
6. Form No. 1 (Application for registration under Partnership Act)
7. Utility Bill as the address proof of Business Place