It is owned and run by one person and has no separate legal identity means owner is personally liable for its liabilities.
Suitable for:
Ø Small Business
Ø Low Budget
Ø Unorganized Business
2.Partnership
Owned by minimum two persons who agreed to contribute resources in to the firm and share profits among themselves in agreed profit sharing ratio.
Indian Partnership Act, 1932 defines Partnership as “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”
Suitable for:
Ø Low Startup budget
Ø Lesser legal Compliance
Ø Small Business
Corporation
A Corporation is formed by two or more persons owned by persons known as shareholders, directed by group of person known as directors and exist as a separate legal entity distinct from its owners, means it enjoys generally all rights that individual hold.
Suitable for:
Ø Mid-size or Large Business
Ø Capital requirements
Ø Long term objectives
Ø Avoidance of personal liability
Limited Liability Company
LLP is a hybrid form of company and partnership that provide advantages of company and features of partnership. LLP is a separate legal entity it is capable of entering into contracts and holding property in its own name. Liability of partners is limited to their contribution in the LLP. Rights and duties of the partners within a LLP are governed by an agreement between the partners
Suitable for:
Ø Small and medium scale Enterprises
Ø Professional Firms
Ø Venture Businesses
Ø Family operated businesses
Ø Information Technology Firm
5. Cooperative
Cooperative form of business is agreed to be formed by group of individuals known as members for fulfillment of their collective objectives. Its primary motive is service to the members rather than making profits.
Suitable for:
Ø Promotion of the interests of society
6. One Person Company:
One Person Company is formed like any other private limited company. It has only one shareholder as its member. Appointment of nominee is required at the time of formation of OPC who would take charge in case of death or disability of the promoter.
Suitable for:
Ø Small Business
Ø Business at early stage
Ø Small Budget
Comparison between forms of business organizations
|
Characteristics /Forms of Business
|
Sole Proprietorship
|
Partnership
|
Corporation
|
LLP
|
Cooperative
|
OPC
|
|
Distinct legal identity
|
No
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Perpetual succession
|
No
|
No
|
Yes
|
Yes
|
Yes
|
No
|
|
Compulsory registration
|
No
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Limited Liability of members
|
No
|
No
|
Yes
|
Yes
|
Only when the society makes it limited
|
Yes
|