Types of business entity
- Sole proprietorship
Sole proprietorship is comparable to the Dutch ‘eenmaanszaak’. Sole proprietorship is the easiest entity to set up, because it doesn’t require a separate PAN (Permanent Account Number) nodig: the PAN of the founder counts as the PAN of the entity.
- Partnership Firm
A Partnership Firm is part of the Partnership Act, dating back to 1932. This regulation stipulates that a minimum of 2 or a maximum of 20 people may form a partnership. A partnership is established on the basis of the capital that every partner contributes. This agreement also determines the income distribution.
- Limited Liability Partnership (LLP)
A LLP is similar to the Dutch B.V. In a LLP the entity’s property is flexible. The financial liability is limited to the investment. A LLP has its own PAN and legal status. Personal situations don’t affect the existence of a LLP
- Private Limited Company
In a Private Limited Company, the owner may own shares. However, he/she may not publicly trade these shares. Liability is limited to the number of shares and the corresponding sum.
- Public Limited Company
The structure of a Public Limited Company resembles that of a Private Limited Company. The difference is in the number of shareholders. A Public Limited Company has no maximum amount of shareholders; a Private Limited Company does. The shares of a Public Limited Company are freely tradable on a stock exchange.