Different Business Organizations to Conduct Business and How to Introduce

Many businessman or layman comes for consulting does not have the basic understanding of business structure or entity type they have for their business.

For example: Many clients come for a requirement of Company Registration, and once they start explaining you understand that they want a Partnership Firm.

The article will explain the different type of business entities/organization that one can have to operate and how to introduce your business.


  1. PROPRIETORSHIP: This is the form of business organization where a single person owns the entire business. A single person is the sole owner of all legal, business and other liabilities. You need not to register with any specific government organization to run business. However, tax registrations are applicable.

    Liability is unlimited, and no separate PAN is required to run the business.

    If you are running a proprietorship, never introduce yourself as owner of some company. Those who know you will not doubt. But, new clients get impression that you really own a company (explained down). Information of a company can be easily viewed from ROC website.
    Its better that you introduce yourself as proprietor of the business.

  2. PARTNERSHIP: When two or more person enters into an agreement to run the business and agree to share profit and loss in agreed manner, they are running business in style of a Partnership Firm.

    If you along with other person are running a business and have executed the partnership deed, your business entity will be known as Partnership Firm. Partnership Firms are governed by The Indian Partnership Act, 1932.

    No, government registration is required. However, one can register the deed with Sub-registrar to make it enforceable.

    Partnership firms are similar to proprietorship except that here 2 or more people own the business. Liability is unlimited and tax registrations are applicable as and when required by tax laws.

    While introducing yourself never say you are partner of the company or own a company. Introduce yourself as partner of the partnership firm.

  3. LIMITED LIABILITY PARTNERSHIP:LLP is the latest form of business organizations introduced in India. These are similar to partnership firms except that LLP have limited liability benefit.

    LLP are governed by The Limited Liability Partnership Act, 2008. Limited Liability Partnerships are relied more by banks, public compared to a normal partnership firm. One need to register LLP with Registrar of corporate Affairs (ROC).

    Introduce yourself as partner of the LLP/Firm.

  4. COMPANY:  You cannot call any business organization as company (most of the people do that). Company is highly regulated form of business organization. Companies are regulated by Companies Act, 2013. Companies are directly regulated by Ministry of Corporate Affairs.

    Companies have more benefits compared to traditional organizations. They enjoy limited liability benefits, Share issuance, ESOPS etc.

    However, owning a company results in some annual fixed expenses whether you generate revenue or not. Companies have to get their accounts audited every year, file annual statements etc.

    Companies are registered with Ministry of Corporate Affairs. Companies are of two types, Private and Public. Public companies can accept money from public.

    If you are shareholder of a company, you can introduce yourself as Owner or shareholder/Director of the company.

Above are the top 4 types of business organizations we have in India. The tax, legal laws are not applicable based on the type of organization. Whether you own a Proprietorship business or Company, legal compliances cannot be avoided.

Hope next time when you introduce yourself, you use the right term to avoid any confusion in this competitive world.

Posted 3 years, 3 months ago by CA Pulkit Sharma

This Article is very nice and explains about various categories of Business and general understanding of it. In Case of Proprietorship (KARNATAKA) - - Registration under Shop, Establishment Act for either Sale of Service or Sale of Products - Registration under VAT for Sale of Product - Registration under Service Tax for Sale of Services, (If, T/O > 9 Lac) - Registration as Employer under Professional Tax - If employees are getting salary more than 10,000 PT shall be deducted and one need to register - If Trading no registration under Excise but if manufacturing registration under Excise Act (T/O 1.50 Cr) - Selling Abroad then need to take IEC Code etc.

Posted 3 years ago by SANJAY KUMAR GANNA

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