Many aspiring entrepreneurs consider starting a business in India the realization of a lifelong dream. Choosing a business structure matters, as this act affects tax obligations, requires compliance, enables fund raising, and allows future growth. Structures include a Sole Proprietorship, a Partnership, a Limited Liability Partnership, and also a Private Limited Company.
Many startups begin as sole proprietorships since these are very easy to create and have few compliance requirements, but the unlimited liability and difficulties in raising funds soon become a disincentive for them. Private Limited Companies are better suited to scaling up, as it is easier to raise funds, and there is a higher credibility.
The LLP is often a useful structure for companies providing professional services. It has less formal incorporation requirements than a private company and greater operational flexibility. Each type of structure has advantages and disadvantages so no structure suits all businesses.
Choosing the wrong structure can create unnecessary tax liabilities in the future, legal complexities in the future, and operational challenges in the future down the road, which is why it's essential to consult an experienced professional before registering your business. At Tridentra Consulting, we guide entrepreneurs through the process of analyzing their business objectives with choosing the right structure for their needs.
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