Starting a business requires careful planning and preparation, including choosing the right type of business entity and complying with various legal and regulatory requirements. One important aspect of setting up a business is understanding the different types of business entities, such as sole proprietorship, partnership, corporation, and limited liability company (LLC). Each type has its own advantages and disadvantages, and choosing the right one can affect the success and growth of the business.
In addition to choosing the right business entity, entrepreneurs must also comply with Know Your Customer (KYC) regulations, which are designed to prevent money laundering and other illegal activities. KYC documentation includes identity proof, address proof, and other supporting documents, and is required by banks and other financial institutions when opening accounts or providing services to businesses.
This comprehensive guide provides entrepreneurs with a clear understanding of the different types of business entities and the KYC documentation required to start and grow a successful business.
A sole proprietorship is a type of business owned and operated by one individual who is responsible for all the debts and obligations of the business.
Examples of sole proprietorship businesses in India include small grocery stores, local tailoring shops, street vendors, and freelance consultants.
A partnership is a type of business in which two or more individuals share the profits and losses of the business. Partnerships are governed by a partnership agreement that outlines the roles and responsibilities of each partner.
Examples of partnership businesses in India include law firms, architecture firms, accounting firms, and medical practices with multiple doctors.
A corporation is a type of business that is treated as a separate legal entity from its owners. This means that the corporation can enter into contracts, own property, and sue or be sued in its own name.
Examples of corporations in India include Tata Motors, Reliance Industries, and Infosys.
A Limited Liability Company, or LLC, is a hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. LLCs are owned by members who are not personally liable for the debts of the company.
Examples of LLCs in India include Swiggy, OYO, and Zomato.
Proof Type
A cooperative is a type of business owned and operated by its members, who share in the profits and benefits of the business. Cooperatives are typically formed to provide goods and services to their members at lower prices or to promote a common interest.
Examples of cooperatives in India include Amul, Kisan Credit Card, and Indian Farmers Fertilizer Cooperative Limited (IFFCO).
A trust is a legal entity that holds property or assets for the benefit of another person or group of people. Trusts in India are governed by the Indian Trusts Act of 1882.
Examples of trusts in India include charitable trusts, educational trusts, and religious trusts.
An NGO, or Non-Governmental Organisation, is a non-profit organisation that is usually formed to address social or environmental issues. NGOs in India are registered under the Societies Registration Act of 1860 or the Indian Trusts Act of 1882.
Examples of NGOs in India include Oxfam India, Save the Children, and CRY.
A HUF, or Hindu Undivided Family, is a type of business that is governed by Hindu law. HUFs are typically formed by a family that shares a common ancestor and pool their resources for business purposes.
Examples of HUF businesses in India include family-owned shops, trading businesses, and real estate development companies.
How to activate or enable e-invoicing
