Ways to Establish Your Business
Running your own business is always a proud feeling. Setting up of business is easy but there are various factors that need to be considered before setting up of business. To become successful in the market, your scope of business must be unique, marketable and distinct.
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There are different types to start a business. What form and structure completely depend on the nature of business, money, a number of persons involved in business, profit etc. Here are the different types to start your business
- Sole proprietorship: As the name speaks, you will be the sole owner and you are entitled to enjoy the entire business profits. This is always the most convenient option for a start business if you are a beginner. There is no legal work in a sole proprietorship. Income from this business is taxed to personal income. The liability of sole proprietor is unlimited meaning, your personal assets can be sued in case of any non-payment of loan/borrowings.
- 2. Partnership: A business operated by two or more partners. Partners enter into a partnership agreement detailing the scope of business, profit sharing ratio, capital contribution, liability etc. The liability in a partnership business is normally joint and several for all the partners. There are sleeping partners whose role is to infuse capital into the business and they don’t participate in any business transaction. However, the sleeping partner enjoys a share in profit.
- 3. Limited Liability Partnership (LLP): This is similar to a partnership; however LLP is governed by LLP act. Under this act, partners are required to obtain designated partner identification number and a digital signature for at least one partner. Unlike a partnership, the liability in this partnership is limited to the amount of capital invested by partners. Partners’ personal assets are not liable. That is why this is the best method of setting up of business with partners provided you are fine in abiding the regulations under LLP act.
- Company: Setting up of a company is governed by Companies Act. A Company is an artificial legal person. Meaning, it is separate on its own and cannot club with personal income/assets or vice versa. There are minimum requirements for shareholders, directors, capital etc. If your scope of business is wider and ready to infuse high capital, then you can start a company. The legal work in starting a company is cumbersome.
If you are passionate about running a business, look for the best form that satisfies your need. There is always a scope for expansion. Think wisely and have a futuristic approach to any business you carry on. Success is always yours.