Starting your own business is a big task. It requires a lot of dedication, motivation, a great idea, some capital, and even greater support. Well, for some, starting a business from scratch might seem illogical and a bad idea. But well, if you want to achieve something great in your life other than from your nine to five job, why not take a risk, leap forward and go with it.
So, well, since it is very important, one must take the utmost care before leaping into anything (at least for the documentation and the starting up the process) and well, then you are free to take any risks. So, here, in this article, you will make familiar with some of those terms and processes that you will face while registering your company.
Types of business structures
In India, there are four types of basic business structure. This is important to know because it all relates to the company’s value in the stock market and also helps in choosing the right shareholders for the firm.
- One Person Company (OPC)
This company is the type of company that is owned by a single person. And so, the whole shares of the company go to a single person. The person will be the sole proprietor of the firm and will be responsible for carrying on the legacy of the company.
- Limited Liability Partnership (LLP)
Although a separate legal entity, in this type of company, the liabilities of the shareholders or the partners are only limited only to their agreed contribution to the firm.
- Private Limited Company (PLC)
A company that is owned by a group of shareholders including the founders and the officers of the company.
- Public Limited Company (PLC)
A type of company in which the shares are sold to the people. You can buy the company’s share.
How to choose a Business Structure?
So, well, it indeed is very important to choose the right business structure to see our business reach greater heights. But well, the thing and the question which arrives in mind is how one chooses a business structure and so, here is a little detail about the same.
- Number of owners/partners
The first thing which needs to be very clear is the number of partners or the owners of the firm. This will decide the size of the business as well as its structure.
- The Initial Capital
Sometimes, owning and opening a company can become a greater loss for someone, and in many cases, people don’t even have the needed amount of money. If the same case is with you, going for a business that includes a partnership with other people will aide you in terms of finances and if you are sure that you will be able to finance your company alone and solely recover for everything, going for a private firm will be the best course of action.
- Willingness to bear the liability
Owning a company does not only mean profits, but it also means loss and many other risks. This also involves the case of a loan. If a company is under a loan amount. It will be the responsibility of the shareholders to pay that loan amount, and so if you are the sole shareholder, this might be a little difficult if the amount is high. So, for this, you will need to consider the business structure very carefully.
There are also many other important points which tell us to choose and a business structure very carefully and after that only apply for company registration. So, think carefully and rock your business.