What does Startups Means?
Startups are infant business model which are yet to take off into the market. Startups need not necessarily be in the form of Company. They can be started in any of the legal forms. We will learn more about legal structures in the remaining sections of the post.
How to Commence business for Startups?
This Article aims to facilitate the Startups to decide upon the form of legal entity to kickoff.
Type of Legal Entity: Company Vs Partnership Vs Individual business
Startups want to take off their business. But, choosing a correct legal form may be a tricky exercise. A commensurate form of business will boost business idea. It also helps to launch the innovative products or service and to penetrate into the market.
Entrepreneurs are good at business related stuff. The form of business can be a company or partnership or Individual.
Each type of Legal forms are distinguished below:
Insightful Learning: Terms to Understand
1. What does Agreement mean?
The Agreement is a formal acceptance of the terms and conditions such as —
- Capital Contributed by each partner
- Profit sharing ratios
- Naming managing partner etc.. in detail.
2. What is Unlimited Liability?
Unlimited Liability means Personal property of Partners/Members can also be attached to the debts made by the Partnership/Sole Proprietorship Firm.
For Instance, In the Case of a Partnership firm – Creditors who granted the loan to a partnership firm can even sue the personal property of the partners in case of default. So, here unlimited liability means partners are liable to clear the debt with their personal assets if in case firm assets are insufficient.
3. What does Compliance requirements mean?
It means Legal formalities such as filing returns, compliance with legal policies or acts.
For Instance –
In case of a company, the number of returns to file with the Registrar of companies are more. The frequency of filing will vary based on the business.
4. For Further details regarding the incorporation of company, go through this link.
What about Limited Liability partnership?
There is another branch of the partnership called Limited Liability Partnership(LLP). Though the liability is limited, the compliance formalities will be higher than a normal partnership and low in comparison with a company.
Based on the above criteria, Startups can choose the best business Model. Initially, it’s advisable to go with the Sole Proprietor and later on a corporate structure can be adopted.
“You must make a decision that you are going to move on. It wont happen automatically. You will have to rise up and say, ‘I don’t care how hard this is, I don’t care how disappointed I am, I’m not going to let this get the best of me. I’m moving on with my life.”
—– Joel Osteen, Author of Your Best Life Now: 7 Steps to Living at Your Full Potential
For More motivational feed, please go through this link.
If you have any questions regarding the registration and tax-related stuff, then feel free to contact us at email@example.com.
How to become a Chartered Accountant