This page will help you get answer to various questions which ordinarily are asked from us. In case you do not get answers to your questions here, you are welcome to set up a call with us or meeting, connect with us and we will be happy to assist.

Q. 1- what are the forms of Businesses in India that could be set-up for running business?

  • OPC (One Person Company)-
    • Suitable for a very small scale , maximum turnover of Sales could be Rs. 2,00,00,000/- , One person could create this company with benefit of limited liability and lesser regulatory filings and records maintenance than the other forms of companies. it is to be noted that another individual is also needed to be appointed as nominee to the promoter/director to provide continuity to the business in case he /she is incapacitated or dies.
  • Private company,
    • Suitable for group of people starting from Minimum 2 and maximum 200 shareholders. This form offers benefit of limited liability and lesser regulatory filings and records maintenance than the public limited companies. However it cannot:
      • Access Public or capital market for raising funds
      • restricts rights of transfer of shares by its own articles which govern the relationship between the shareholder inter-se.
      • accept deposits from public
  • Public company,
    • A form of company with minimum 7 shareholders and 3 directors that has got the potential and flexibility of attaining best heights utilizing public fund, accessing capital marketing by way of IPO, FPO and issuance of other instruments such as GDRs/PN/Debentures/Bonds and deposits from public. However it is strictly regulated and the compliance norms are widest and strictest. Thus, the cost as well as the risk of compliance is highest in such a company.
  • Nidhi Company
    • This form of company is primarily meant to help people save and invest together, manage and meet their financial goals and needs on the principles of co-operative. There must be 200 members of the company and it can accept deposits, open accounts like banks, lend money and secure it, enforce the claims but all dealing parties must be members/shareholders. It is not allowed to deal with non-members.
  • Producer company.
    • This form is suitable for people connected and engaged with production activities like farmers, artisans, artists and handicrafts makers and so on, it could be started with minimum 10 members who must be engaged in or connected with production activity. There must be 5 Directors for the company which may be out of the shareholders
  • LLP (Limited Liability partnership)
    • This concept of partnership with limited liabilities have been introduced in India in recent past and is a better alternative for partnership in general as it offers the benefit of limited liabilities but it also has higher compliance under the Limited Liabilities partnership act. Ministry of corporate affairs (MCA) also regulates LLPs. It can be started with minimum 2 partners/designated partners. For taxation perspective, it stands on the same footings as a general partnership firm.
  • Partnership firms
    • It is one of the simplest and oldest form of business combining resources of 2 or more individuals. it has unlimited liabilities against third parties and its registration is optional with the Registrar of firm. There is a flexibility in operation and decision making but because of its less regulated entity feature, large transaction/corporate deals do not happen with it. it is relatively lesser trusted entity compared to the companies/other regulated entities.
  • Proprietorship firm
    • It is the oldest form of business where one individual or person is having complete control over operations and assets and also has unlimited liabilities against third parties. There is no definite registration required for forming proprietorship and the PAN and other records of owner could be used to set-up it. However, other legislation like professional tax, shops and establishment act make registration mandatory for such entities in certain cases. There is absolute flexibility in operation and decision making but because of its less regulated entity feature, large transaction/corporate deals do not happen with it. It is least trusted entity compared to the companies/other regulated entities.
  • Co-operative Societies
    • 10 or more persons could come together to be incorporated or registered as society on the principle of common co-operation for furtherance of a common cause such as housing, transportation, availing goods or services or meeting financial needs and so on. it is set-up, run and managed by the members for the members and the profits/benefits accrue to the members in the ratio of their membership. Registrar of Co-operative societies in the respective states register and monitor their functioning.

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