: Each type of company has its advantages and disadvantages. If you want to start a company, know all about the various types of businesses and choose one that suits your requirements and goals.

“Each business structure has its features. A sole proprietorship is better suited for small businesses. On the other hand, if you want to raise money from the public, you need to start a public company.” When you intend to start a business, you must decide the type of business you desire to run. Each business structure has its features. A sole proprietorship is better suited for small businesses. On the other hand, if you want to raise money from the public, you need to start a public company. To help you figure out the right kind of business for you, here is some information on the different types of companies in India with their unique features:

Types of Businesses in India

Sole Proprietorship

In a sole proprietorship, the proprietor pays their income tax on the business’s profits. When it comes to setting up or dissolving a business, sole proprietorships are the easiest. This is why they are popular among sole proprietors, self-employed contractors or freelancers, and consultants. Creating a separate business isn’t often necessary for small businesses. Therefore, sole proprietorships are popular. 

In contrast to an LLC, a corporation, or a limited liability partnership, there is no separate legal entity in a sole proprietorship. Consequently, the sole proprietor is not exempt from any responsibilities or actions taken by the company.

The debt owed by the sole proprietorship is the responsibility of the owner. Likewise, a sole proprietorship’s profits belong to the business owner only.


In a partnership, two or more people enter into a formal agreement to manage and operate a business together and split the profits.

There are a variety of ways to form a partnership. Partners may or may not have unlimited liability, depending on the terms of the agreement. Another type of partnership is the “silent partner,” in which one party does not participate in the operations.

Each partner is responsible for their own legal and financial responsibilities in a general partnership. The partnership’s debts are the responsibility of each member. Also, the profits are equally split unless agreed otherwise. In a partnership agreement, the details of profit-sharing are likely to be written out in a partnership deed.

Limited Liability Partnerships (LLP)

It is usual for accountants, lawyers, and architects to form limited liability partnerships (LLPs). Equity partners and salaried partners are two further classifications used by law and accounting firms. Salaried partners do not hold any equity in the company. In most cases, they receive additional compensation based on their performance.

To form an LLP, you need to have at least one general partner personally liable for the partnership’s liabilities. The responsibility of at least one partner is limited only to the amount invested. Unlike the active partners, the silent ones are not involved in the company’s day-to-day management.

Limited Liability Companies (LLC)

LLCs shield their owners from personal accountability for the company’s debts and liabilities. Hybrid businesses and limited liability corporations (LLCs) combine a corporation and a partnership or a single proprietorship.

Creditors might be able to take after members who commit fraud or fail to meet their legal and reporting obligations.


Groups of people form a corporation to legally run a commercial or industrial venture. Depending on the local corporate legislation, a business can be structured in various ways for tax and financial liability considerations.

Whatever is the kind of business, the type of business structure a company chooses (such as a sole proprietorship, partnership, or corporation) is largely determined by this. These structures also indicate the company’s ownership structure.

The distinction between private and public companies can also be made. The two companies are vastly different in ownership, rules, and financial reporting.

A company is distinct from its owners, managers, and employees. Most businesses are set up to profit, while some are for charitable purposes. Companies and corporate hierarchies differ from country to country, yet there are many similarities as well.

Documents Required to Open a Business in India

A sole proprietorship does not require registration in India. Therefore, you will not need any documents for that. However, you might need a PAN number and the TIN for tax purposes. 

For partnership business, you need address proof of the partnership, identity proof, partnership registration certificate, GST certificate, etc. 

For starting a company, you need the following documents:

  • No objection certificate (NOC)
  • Company PAN card
  • Founders agreement
  • TIN
  • Non-disclosure agreement
  • Shareholder agreement
  • Certificate of incorporation

Registering an Online Business in India

All unicorn businesses in India had to start somewhere, register, and start online. You must first visit the Ministry of Corporate Affairs’ website to begin the process. You need to fill out two forms at this stage: DIR3 and DSCl Applying for a DIN online are as simple as filling out these two forms.

If you’re filling out these forms, keep in mind that you’ll need to attach specific papers. These documents are proof of address, proof of employment, a passport, and educational credentials. Passport-sized photos are also required.

The next step is to apply for a Digital Signature Certificate (DSC). You cannot apply for registration online unless you have a Digital Signature Certificate (DSC). Documentation is required for the DSC, as it is for the DIN. It is necessary to have a valid photo ID and all documents mentioned above to enter the country. To achieve online business growth in India, you must register your business first.


What type of business is more profitable?

All types of businesses are profitable. You have to select which one is the most suitable for you.

Why do different types of businesses exist?

No two businesses are the same. There are different types of business structures to accommodate different purposes and requirements of people.

What are the different types of businesses in India?

The different types of businesses in India are: 
1. Sole Proprietorship
2. Partnership
3. Limited Liability Partnership
4. Company

What type of businesses are in demand?

All types of businesses are in demand right now. In India, the most common form of business is a sole proprietorship.

What are the five types of business organizations?

Here are the five types of business organizations:
1. Sole Proprietorship
2. Partnership
3. Limited Liability Partnership
4. Company
5. Limited Liability Company