CHOOSE THE RIGHT STRUCTURE OF BUSINESS

INTRODUCTION:

 

A business structure may be a category of an organization that's legally recognized during a given jurisdiction and characterized by the legal definition of that specific category. one among the foremost important decisions you’ll make early is how your business is going to be structured. Choosing the proper legal structure for your business starts with analysing your company’s goals and considering local, state and federal laws. By defining your goals, you'll pick the legal structure that most closely fits your company’s culture. As your business grows, you'll change your legal structure to satisfy your business's new needs.

Your business structure affects what proportion you pay in taxes, your ability to boost money, the paperwork you would like to file, and your personal liability.

While you'll convert to a special business structure within the future, there could also be restrictions supported your location. this might also end in tax consequences and unintended dissolution, among other complications.

You can change structures to accommodate the expansion of your business, but changing legal structures can often be very complex. it's important to think twice early about which structure is that the right one for your business and best reflects your goals for the longer term.

To set up a small business structure the best way to start is with a simple plan. It's not always easy to find a good business structure, especially if you're new or haven't had much experience with the business structure before. However, having a solid plan will help you get started on what you need to do to run your business successfully.

 

HOW TO CHOOSE AND DECIDE THE NUMBER OF OWNERS IN A BUSINESS?

 

Partnerships are the only structure for 2 or more people to have a business together. There are two common sorts of partnerships: limited partnerships (LP) and indebtedness partnerships (LLP).

Limited partnerships have just one general partner with unlimited liability, and everyone other partners have indebtedness. The partners with indebtedness also tend to possess limited control over the corporate, which is documented during a partnership agreement. Profits are skilled to non-public tax returns, and therefore the general partner the partner without indebtedness must also pay self-employment taxes. the overall partners own and operate the business and assume liability for the partnership, while the limited partners function investors only; they need no control over the corporate and aren't subject to an equivalent liability because of the general partners.

Partnerships are often an honest choice for businesses with multiple owners, professional groups, and groups who want to check their business idea before forming a more formal business. There are many sorts of partnerships, but all of them have different benefits. Partnership firm represents a business entity that's formed with the aim of making cash in of the business. Two or more parties close with a correct agreement (known as Partnership Deed) to possess and manage the business.

Therefore, choosing a partner is not only important for the business but also helps you to get a better understanding of what kind of business you can start. If you're looking for a good partner, then it's best you find someone who has experience in this field. The best way to find a good partner is by searching online. It's easy to find a good partner on the internet. However, finding a good one is very difficult. It takes time and effort to find a good partner.

 

CONTROL OVER DECISIONS IN BUSINESS:

 

Decisions are one major firm factor that will lead you and your business to great peak and wrong can drag your business down as well. It is advised that to decide while keeping several decisions in mind, after all, it is going to affect your business directly. If you are not able to decide which option is better then what should be done? Then one should always take advice from the people in the surroundings and from the expertise people around to clear the mind, the correct decision will win you a better position of your business. If you are in a partnership scenario then you should always listen to all your partners and then all of you should make a decision looking forewords through various situations that are going to happen because of the decision that you are going to agree on. So, calmness will win you over decisions and business as well.

 

PERSONNAL RISKS:

 

An idea turning into a business is nothing but raising up your own child and choosing the right structure for your business is like making comforts and giving best upbringing to your child; hence, an entrepreneur takes a huge risk before starting a business. There are huge threats or risks in this thing and an entrepreneur takes over that on his/her personal life. They can face multiple personal risks such as, bankruptcy, financial risks, competitive risks, trusting people and most importantly your health and stability. An entrepreneur creates an empire on his/her as well as the employees sweat and blood.

 

RAISING AND BORROWING MONEY:

 

Businesses got to raise money once they don't have enough capital to finance a business expansion or meet regular financial obligations like payroll and supplier invoices. Banks aren't always willing to lend money even in desperate situations, consistent with online business resource Entrepreneur. so as to assist your business meet its financial obligations, you would like to consider alternate ways to boost money for a business. While money doesn’t grow on trees, there is a variety of the way you'll seek funding for your business. You can raise or borrow money from friends and family, bank loans or other sources. It's important to note that these methods are not all fool-proof. Some people will use their own money to fund their businesses, others will use borrowed money to finance their ventures.

 

COST OF RGISTRATION AND MAINTENANCE:

 

Under Section 403 of the Companies Act, 2013, the cost of registering a company varies on different things and those are following…

 

• Small companies and one person companies having a share capital:

1. When the nominal share is < Rs 10.000,00; Cost is Rs 2000
2. When the nominal share is < Rs 50,000,00; Cost is Rs 200 for every Rs 10,000 or part thereof nominal share capital.
3. When the nominal share is < Rs 1 crore; Cost is Rs 1,56,000. But Rs 100 will be added for every Rs 10,000 thereof.
4. When the nominal share is > Rs 1 crore; Cost is Rs 2,06,000 wherein Rs 75 will be added for every Rs 10,000 thereof subject to a max. of Rs 250 crore.

• Other than one person companies and small companies having a share capital:

1. When the nominal share capital is < Rs 1,00,000; Cost Rs 5000
2. When the nominal share capital is < Rs 5,00,000; Cost Rs 400 for every Rs 10,000 or thereof
3. When the nominal share capital is < Rs 50,00,000; Cost Rs 300 for every Rs 10,000 or thereof
4. When the nominal share capital is < Rs1 crore; Cost Rs 100 for every Rs 10,000 or thereof
5. When the nominal share capital is > Rs 1 crore; Cost Rs 75 for every Rs 10,000 or thereof

• Cost of registering companies with no share capital:

1. companies whose number of members (as stated in AoA) is within 20 – Rs 2,000
2. companies whose number of members (as stated in AoA) is more than 20 – Rs 5,000
3. companies whose number of members (as stated in AoA) is more than 200 but is not stated to be unlimited – Rs 5000 plus an additional fee of Rs 10 for every member after first 200.
4. companies whose number of members (as stated in AoA) is unlimited– Rs 10,000

 

STRUCTURE OF TAXATION:

 

One thing to note is that taxation structure differs based on what business structure you follow, as the taxation is different for every business structure. For example, if you're a sole proprietor and have limited liability company, then you may need to pay taxes on your business assets. If you're a corporation, then your income tax rate is higher than that of an individual shareholder and therefore you'll be taxed more. If you are a partnership, then your income tax rates are lower than that of an individual member of the partnership. If you're a sole proprietor and have limited liability company, then your income tax rate is higher than that of an individual member of the partnership. Besides, there are many other types of businesses that require a separate entity.

A company that's established in India and is registered under India’s Companies Act, 2013 is termed as a Domestic Corporate. Even a far-off company are often considered as a domestic corporation if the Indian arm’s management and control are wholly based in India.

 

PRIVACY OF DOCUMENTS IN BUSINESS:

 

Privacy policies are necessary for running any business. The policies should cover online and offline usage of private information like good and services activities, employers’ activities, financial activities, customer feedback activities. Update the policy when required and make sure that they cover the privacy implications. Sometimes even the copyrights laws also impact on privacy policies and thus it's to be taken care. Every organisation should undertake the task of protecting the info related to the workers and clients.