Types of Enterprises

EFB 203

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Types of Enterprises in India
Proprietorship
• Default when someone starts personal business
• No formal registration
• Only Name and Logo etc to be selected
• All taxations, liabilities, assets created are listed under personal identity / name

Partnership
• Two or more partners, maximum upto 200 members
• Partnership deed to be registered under Indian Partnership Act
• Partnership firm is a separate entity for taxation
• Partners’ share of income also taxed under personal income
• Partners have unlimited liabilities for any losses / debts incurred by the firm

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Enterprises in India
 Company – Private Limited
• Under Indian Companies Act (1956, 2013)
• Registration required
• Directors have to register and obtain – Director Identification Number (DIN)
• Two or more Directors, Shareholders
• Liability of shareholders limited to their share
• Taxed as separate entity
• Dividend payout is taxed under dividend tax, then not taxed under Individual income
• Statutory compliance defined by Company Law – including audit of accounts

• Special Case: Not for Profit Company

o Section 8 company (old Section 25) – for not-for-profit Company
o Cannot pay dividend
o Income is taxable, but can get separate tax exemption status based on activities

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Enterprises in India
One Person Company (OPC)
• Company formed by 1 person
• Simple compliances (since single Director and Shareholder)
• Must be converted into a Private Limited Company when
o annual turnover crosses Rs.2 cr.
o Paid up capital exceeds 50 Lakhs

Limited Liability Partnership

• Under Limited >Liability Partnership Act (2008)
• Liability limited to the shareholding of each partner
• Taxation same as partnership

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Enterprises in India
Producer Company:
• To allow cooperatives to function as a corporate entity under the Ministry Of Corporate Affairs.
• Members must be `primary producers,’ that is, persons engaged in an activity connected with, or related to,
primary produce, i.e. directly arising from agriculture such as fishery, horticulture, animal husbandry, bee
raising and similar others.
• For the registration of a Producer Company in India, the following members in any one of the order are
required:
o Ten or more individuals, each of them being a producer, or
o Two or more producer institutions; or
o A combination of ten or more individuals and producer institutions

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Enterprises in India
 Company – Public Limited
• All regulations as applicable to Companies under Indian Companies Act (1956,
2013)
• minimum 3 Directors and 7 Members
• Company’s shares / debentures etc can be listed on Stock exchange
• SEBI norms apply for listed companies
o Stringent regulatory and reporting norms
• Can raise money from market through Public offering

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Enterprises in India
 Other types of organizations
• Cooperatives
o E.g. AMUL (Anand Milk Producers Union)
o Often formed by members who want to create organization and management to increase their
power and influence through united effort.
o Can be for profit. Dividend is limited.
o Formed under Registrar of Co-operative Societies (state-level or Multi-state)
• Trusts and Societies
o Usually for investments, NGO’s, voluntary organizations
o Cannot distribute income in form of dividends
o Can employ and pay salaries
o Based on their activities, may get tax exemption for charitable activities (now limited to 50%).
o Trusts formed under Indian Trusts Act 1882, Societies under Societies Registration Act 1860.

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Any Questions?