Starting a proprietary concern or proprietary firm is a simple process. There is no formal registration to be done. An Individual / Sole trader (or one person firm) intending to do business or profession, can register the concern under Goods and Service Tax Act (GST), Profession Tax Act or Shops and Establishment Act or Udyog Aadhar (MSME)

+ Can a business name be given for proprietary concern?

Yes. The business can be operated in the Individual’s name or a formal name can be given to perform the business.

Persons who have entered into a partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm-name".

To commence a partnership firm, atleast two persons are required. The firm doesn’t have a separate legal entity like a company. The firm is a collective name given to individual partners.

A firm is registered under Registrar of Firms, situated in the respective jurisdiction.

Setting up a Private Limited Company in India requires a minimum of TWO shareholders and TWO directors. The shareholders can be the directors of the company. One of the directors, however, should be a Resident Indian.

Choosing the name of the company is a bit tricky! While choosing the name, one has to ensure that the Name;

• Does not resemble the name of any other already registered company.

• Does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.

• Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.

Once the name is chosen, then file an application for the incorporation with Registrar of Companies (ROC), along with Memorandum and Articles of Association, particulars of directors, etc.

Digital Signature – All the directors have to mandatorily obtain the digital signature.

Once the application is processed by the Registrar of Companies, they will issue Incorporation Certificate mentioning a Corporate Identity Number (CIN).

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.

The LLP is a separate legal entity, is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

+ What is the difference between LLP and traditional partnership firms?

• Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.

• Under LLP structure, the liability of the partner is limited to his agreed contribution.

+ Whether a charitable activity can be carried out under LLP?

No. The essential requirement for setting LLP is ‘carrying on a lawful business with a view to profit’.

+ How many people are required to start a LLP?

A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners.

+ Can a company be a partner in LLP?

Yes. A company can be a partner in LLP

+ Who is a designated partner?

Every LLP shall be required to have at least two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of an LLP in which all the partners are body corporates or in which one or more partners are individuals and body corporates, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

+ Where is the LLP to be registered?

LLPs shall be registered with the Registrar of Companies (ROC)

+ Whether foreigners can incorporate LLP?

Yes, the LLP Act allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India. However, the LLP/Partners would have to comply with all relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines.

A One Person Company (OPC) combines most of the benefits of a sole proprietorship and a company form of business. It has only one person as a member who will act in the capacity of a director as well as a shareholder.

OPC is formed as a Private Limited Company.

+ Can a foreign national form an OPC?

No. Only an Indian citizen and resident can form a One Person Company.

+ Is there a restriction in setting up OPC?

Yes. An individual can start only one OPC.

+ Who can start an OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.

For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.

A trust can be registered under Indian Trust Act, 1882 and a society can be formed under the provisions of Societies Registration Act.

+ How many people are required to start a Trust?

At least two trustees are required to register a public charitable trust. However, a minimum of seven members are required for formation of a society.

+ Is there any annual filing to be done?

There is no requirement for annual filing in case of Trusts. However, societies must file annual returns with the Registrar of societies.

+ Can Trusts and societies get Income Tax Exemption?

Yes, both Trusts and societies are eligible for tax exemption provided the exemption criteria of the Income Tax Act are complied with.

Charitable Trusts can be set up in three different forms, namely

(a) register a trust under Indian Trust Act (register the trust at Sub-Registrar’s Office)

(b) Register it as a society under State Co-operative Societies Act or

(c) incorporate a company under Companies Act, 2013

The registration of a company under Companies Act, 2013 is popularly known as ‘Section 8’ company.

+ Who can set up a Section 8 company?

• The companies with the objective of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objective;

•  Intends to apply its profits, if any, or other income in promoting its objectives; and

• Intends to prohibit the payment of any dividend to its members; can be registered as Section 8 Company.

+ What registrations are required under Income Tax Act?

Charitable Trusts including Section 8 companies are eligible for tax exemption u/s 11, 12, 12A, 12AA, 13 and 80G of the Income Tax Act. 

The expression “charitable purpose” has been defined under Section 2(15) of the Act to include: (a) relief of the poor, (b) education, (c) medical relief, and (d) advancement of any other object of general public utility.

+ Can Section 8 company merge with another company?

Yes. Section 8 companies can amalgamate only with other section 8 company and having similar objectives

Association of Persons (AOP) is an entity formed by two or more persons, for a common purpose with an objective of producing income or profits.

An association of persons (AOP) or a body of individuals (BOI), whether incorporated or not, is treated as a ‘person’ under section 2(31) of the Income-tax Act, 1961. Hence, AOP or BOI is treated as a separate entity for the purpose of assessment under the Income-Tax Act.

+ What type of activities is generally done through an AOP?

We have come across situations where a group of individuals join together for conducting a one-time event such as seminar, conference, etc., forms an AOP.

+ Is it mandatory to file return of income?

Every AOP/BOI whether incorporated or not has to file the return of income if his total income exceeds exceeds the basic tax exemption limit.