These slides cover session 6 in the 8 session program for working executives on Entrepreneurship. In this session, the objective is to introduce the various forms of enterprise that entrepreneurs would typically consider setting up. A broad treatise on different forms of enterprise is also provided, more to provide a well-rounded introduction to the subject. A short caselet helps the students analyze the pros and cons of setting up different forms of enterprise and arrive at an informed decision

1. Anilesh Seth
Ideator, Co Founder & CEO, KROW
www.krow.in
Strategic Advisor to the Qatalys Group of Companies
Mentor at the KYRON incubator
Visiting Faculty at CMR IT Exec MBA program
Ex-CEO/MD: LGSI, Qatalys & Supervalu India
www.slideshare.net/anilesh
http://In.linkedin.com/in/anileshseth
anileshseth@hotmail.com

2. Session objectives
• To get a broad overview of the different forms of enterprise
that can be set up in India – understand broadly the pros and
cons of each and gain a brief appreciation of the procedure
involved
• To be able to make an informed decision of the type of
enterprise a start up should consider setting up – without
getting mired in the legal details or the intricacies of each and
every step of set up
• The scope of this session includes a simple introduction to
non-profit organizations, without a treatise on either the
procedure of setting up one or on the pros and cons vis-à-vis
other forms of organization

3. Types of companies
Unlimited liability Limited liability Non profit
Proprietership
Partnership
Limited liability partnership
Private limited company
Public limited company
Trust
Society
Section 25 company

4. Proprietorship
A proprietorship firm is one in which an individual invests own or
borrowed capital, uses own skills in management and is solely
responsible for the results of operation*
PROs CONs Procedure
Simple and easy to start or exit No separate entity of the firm No registration with the Govt
Undivided profits Unlimited liability Proprietor needs a PAN card
Prompt decision making Limited availability of funds Bank account in the name of the
business
Secrets of trade Uncertain life of business Service tax, CST/VAT as applicable
*Tata McGraw Hill Education: Managerial economics
-Freelance business consultant
-Real estate agent
-Mom ‘n Pop grocery store

5. Partnership
A Partnership is a relationship between persons who have agreed to
share the profits of a business carried on by all or any of them acting
for all*
*Tata McGraw Hill Education: Managerial economics
-Law firms
-Service firms set up by two or more
PROs CONs Procedure
Easy formation Uncertain life of the firm Finalize a business name
Stronger credit position Unlimited liability Register a deed with the registrar of
companies
Shared risk Dissents and distrust Get a PAN no for the firm and open a
bank account
Shared wisdom and resources Insufficient funds/Ability to raise funds Service tax, CST/VAT as applicable

6. Limited liability partnership
An LLP is a hybrid between a company and a partnership that provides
the benefits of limited liability and allows its members the flexibility of
organizing their internal structure as a partnership based on a mutually
arrived agreement
-KROW
-Accounting firms
PROs CONs Procedure
Easy formation Ability to raise funds through shares
is limited
Finalize a business name
Limited liability Requires DIN no
Requires annual returns but no
onerous compliance needs
Register a deed with the registrar of
companies
Easy to close down Get a PAN no for the firm and open a
bank account
Service tax, CST/VAT as applicable

7. Private limited company
This is a type of company that offers limited liability to its shareholders
but places restrictions on ownership
PROs CONs Procedure
Limited liability More stringent regulations to be
followed such as Board meetings etc
Finalize a business name
Continuity of existence More steps in company formation –
need for Memorandum and Articles of
Association
Requires DIN no
Can raise more capital as max no of
shareholders is 50
Not easy to shut down Prepare M & Articles of association
Apply for incorporation
Service tax, CST/VAT as applicable

8. Public limited company
This is a type of company that offers limited liability to its shareholders
but places restrictions on ownership
PROs CONs Procedure
Limited liability Stringent regulations and greater
transparency
Similar to a private limited company –
but requires a certificate of
commencement of business
Can raise money from a wider set of
shareholders
Not easy to shut down Requires a minimum of 7
shareholders and 3 directors
Can create a market for the shares by
getting them listed
Generally no restriction on share
transfers

9. Caselet
• Three young aspiring engineers decide to set up an apps company whilst still at college
• Their capital requirement is minimal since at this stage they all feel they need to do is to
develop specific apps – something each one is good at. They don’t need to hire anyone for
this stage
• They would however like to “sell” the downloadable apps to consumers in a pilot mode
before deciding the next course of action
• They have thought of a name for their business – Zappapp – and have decided to pool in
about Rs 1,50,000/= as start up capital for any miscellaneous expenses that may be required
• They plan to build a portal and to host it on the cloud
• They are not sure if they want to take up jobs after graduating or want to stay with their
startup
• They do realize that for them to grow and scale they will need to infuse money in the future
from investors. They don’t know how much and when
What form of enterprise would you advise them to set up?

10. Thank you!