Setting Up Business

Choosing the right structure, before you register anything.

The business structure you choose affects your taxes, liability, and compliance obligations from day one. Here's a plain-language guide to the most common structures in India.

Sole Proprietorship

An individual owns and manages the business without the complexities of a formal organization.

  • GST registration required if turnover exceeds the prescribed threshold
  • Not legally required, but advisable to open a separate business bank account
  • EPF and ESI registration needed once employee count crosses the statutory limit
  • Professional Tax registration may apply depending on your state

Partnership Firm

Two or more individuals come together to carry out a business, sharing profits and liabilities.

  • Income tax: the firm itself is not taxed separately — partners are individually taxed on their share of profits
  • GST registration required if turnover exceeds the threshold
  • A dedicated partnership bank account keeps business finances transparent and separate from personal accounts
  • Labour law compliance (EPF, ESI, professional tax) applies once employees are hired

Limited Liability Partnership (LLP)

A hybrid structure that combines elements of both partnerships and limited companies — partner flexibility with limited liability protection.

  • Suited to professional and service businesses that want liability protection without full corporate compliance
  • GST, EPF/ESI and other registrations apply based on turnover and headcount, same as other structures

Private Limited Company

A company that restricts share transfers, limits members to 200, and prohibits public invitations to subscribe to its securities.

  • The most common structure for startups and growth-stage businesses raising outside capital
  • Comes with ROC annual filings, board resolutions, and ongoing company-law compliance

Public Limited Company

A company that is not private — it can invite the public to subscribe to its securities and has no member limit.

  • Heavier disclosure and governance requirements than a private limited company
  • Suited to larger businesses planning to raise capital from the public

Foreign Company Branch

A company incorporated outside India that has a place of business in India and conducts business activities here.

  • Subject to RBI and FEMA compliance in addition to standard tax and company-law requirements
  • Requires careful structuring around repatriation, reporting and permitted activities

Trust

An arrangement where a person transfers assets to a trustee, who manages them for the benefit of beneficiaries.

  • Used for charitable, religious, and family wealth-management purposes
  • Registration and compliance requirements depend on the trust's purpose and structure

Not sure which structure fits your business?

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