Proprietorship, LLP or private limited: how to choose

Founders who sit down with us before starting a business usually ask one question first: what kind of entity should I register? There is no single answer, but most small businesses in Ahmedabad choose one of three.

A sole proprietorship is the simplest. There is no separate registration for the business itself; you open a current account, register for GST if needed and file business income in your own return. Costs are low. The drawback is unlimited liability: if the business owes money, your personal assets are at risk. It suits small traders, consultants and shops run by one person.

A limited liability partnership protects the partners’ personal assets, has fewer compliance requirements than a company and needs no audit until turnover or contribution passes set limits. It suits professional firms and family businesses with two or more partners who do not plan to raise outside equity. Registration costs ₹8,000 to ₹12,000 with us, plus government fees.

A private limited company has the most paperwork: board meetings, an annual audit and annual forms with the registrar. In return, it is the structure banks and investors understand best, and shares can be issued to co-founders, employees and investors. Our incorporation fee for two directors is ₹14,000. If you expect to raise investment within two years, start as a company; converting later costs more. If not, an LLP or a proprietorship is usually enough. A 45-minute meeting with a partner costs ₹2,000, adjusted against any work you give us.