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The main types of business entities in India are Sole Proprietorship, Partnership, Hindu Undivided Family (HUF) Business, Limited Liability Partnership (LLP), Co-operative Societies, Branch Office and Company which may be any kind of company including One Person Company (OPC), private company, public company, Guarantee Company, subsidiary company, statutory company, insurance company or unlimited company. There can also be Association of Persons (AOP) and Body of Individuals (BOI), Corporation, Co-operative Society, Trust etc. Broadly the following are the available modes of organizations: 1. Sole Proprietorship Sole proprietorship is a form of business, wherein one person owns all the assets of the business, no legal formalities are required to create a sole proprietorship other than an appropriate licensing to conduct a business and registration of business name if it differs from that sole proprietorship. The owner reports income/loss from this business along with is personal income tax return. Merits: Easy to establish and operate. Sole Beneficiary of Profits. Demerits: Unlimited Liability Higher Tax Incidence. 2. Partnership Firm Partnership firms are created by drafting a partnership deed among the partners. The partnership deed is registered to make a firm. Partnership firms in India are, governed by the Indian Partnership Act, 1932. Section 464 of the Companies Act, 2013 empowers the Central Government to prescribe maximum number of partners in a firm but the number of partners so prescribed cannot be more than 100. The Central Government has prescribed maximum number of partners in a firm to be 50 vide Rule 10 of the Companies (Miscellaneous) Rules, 2014. Thus, in effect, a partnership firm cannot have more than 50 members. Merits: Easy to establish and operate. If the partnership agreement permits, a partnership could continue to exist if one of the partners dies. Demerits: Unlimited Liability Possibility of conflicts. 3. Limited Liability Partnership (LLP) Limited Liability Partnership is an alternate corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm, introduced in India by way of limited Liability Partnership Act, 2008. Merits: Lower registration cost. No requirement of compulsory Audit. Demerits: Penalty for non-compliance. Inability to have Equity Investment. 4. One Person Company (OPC) OPC means a company with only 1 person as a member. Share holder can make only 1 nominee, he shall become a shareholder in case of death/incapacity of original stakeholder. Merits: Can be incorporated with minimum one director. Complete control Demerits: Suitable only for small business. One-person Company can have Minimum or Maximum no. of 1 Member. 5. Private Company Private company is a company which has the following characteristics: Shareholders right to transfer shares is restricted. Minimum number of 2 members in company. Number of shareholders is limited to 200. An invitation to the public to subscribe to any shares or debentures or any type of security is prohibited. Merits: Separate Legal Entity Limited Liability Demerits: In stock exchanges shares cannot be quoted. It restricts transferability of shares by its articles. 6. Public Company A public company is a company which has the following characteristics: Shareholders right to transfer share; is not restricted. Minimum 7 members. An invitation to the public to subscribe to any shares or debentures or any type of security is permitted. Merits: Limited Liability of shareholders. Unlimited source of raising funding. Demerits: More statutory compliances. Lack of secrecy. 7. Hindu Undivided Family (HUF) A Hindu family can come together and form a HUF. HUF is taxed separately from its members. One can save taxes by creating a family unit and pooling in assets to form a HUF. HUF has its own PAN and files tax returns independent of its members. Merits: Members are liable to pay taxes just like other individuals. Two PAN cards can be created and each of them file the taxes separately. Demerits: All members have equal rights on the property. Closing the HUF could be difficult. 8. Co-operative Society A cooperative organization is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled organization, making equitable distributions to the capital required, and accepting a fair share of risk and benefits of the undertaking. Merits: Limited Liability Equality in voting rights Demerits: Government Control Mutual Disputes 9. Section 8 Company Section 8 company is a company established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object', provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Section 8 Companies are registered under the Companies Act, 2013. Merits: Access to tax benefits Improved Credibility Demerits: Stringent Compliances and norms Profit cannot be a prime objective