1.

Sole Proprietorship

• Advantages:

o Full control over all decisions.

o Easy and inexpensive to set up.

o Retain all profits.

o Minimal legal formalities and paperwork.

o Flexibility in managing operations.

• Disadvantages:

o Unlimited liability: Personal assets are at risk for business debts.

o Limited access to capital: Relies on personal funds or loans.

o Difficult to scale: Growth limited by the owner’s capacity.

o No continuity: Business ends if the owner dies or exits.

o Limited expertise: Owner must manage all functions (marketing, finance, etc.).

2. Partnership

• Advantages:

o Shared responsibility: Partners divide tasks based on expertise.

o Easier to raise capital: More resources than a sole proprietorship.

o Simple formation: Requires a partnership agreement, but fewer formalities.

o Pooling of skills and expertise: Multiple partners contribute to decision-making.

o Shared risk: Losses are borne by all partners, reducing individual burden.

• Disadvantages:

o Unlimited liability: Partners are personally liable for business debts (except in limited partnerships).

o Potential conflicts: Disagreements between partners may harm business.

o Profit sharing: Profits are split, which may reduce individual earnings.

o Limited continuity: The business may dissolve if a partner leaves or dies.

o Joint liability: One partner's actions can affect all partners.

3. Limited Liability Partnership (LLP)

• Advantages:

o Limited liability: Personal assets of partners are protected.

o Separate legal entity: The LLP can own property and sue/be sued.

o Flexible management: Less rigid than a corporate structure.

o Perpetual succession: Continues even if partners change.

• Disadvantages:

o Higher regulatory compliance: Annual filings, audits, and legal formalities required.

o Cannot raise public capital: Limited to private investments or loans.

o More expensive to set up compared to a general partnership.

o Limited to certain professions: Popular among legal, accounting, and consulting firms.

o Reduced decision-making freedom: Due to statutory requirements.

4. Private Limited Company (Pvt Ltd)

• Advantages:

o Limited liability: Shareholders’ personal assets are protected.

o Ability to raise private capital: Through private investors or venture capital.

o Perpetual succession: The company continues to exist regardless of ownership changes.

o Separate legal entity: Company can sue, be sued, and own assets.

o Greater credibility: Viewed as more professional by investors and clients.

• Disadvantages:

o Complex registration: Requires legal processes and formal documentation (Articles of Association,
etc.).

o Higher regulatory requirements: Must adhere to stricter compliance and reporting.

o Limited stock transferability: Shares cannot be publicly traded.

o Higher costs: Incorporation and compliance fees.

o Less operational flexibility: Bound by corporate laws and regulations.

5. Public Limited Company (Ltd)

• Advantages:

o Access to public capital: Can raise large amounts of capital through public share offerings.

o Limited liability: Shareholders’ risk is limited to their investment.

o Perpetual succession: The company exists independently of its shareholders.

o Enhanced visibility and credibility: Being listed on a stock exchange increases trust.

o Growth potential: Easier to scale and expand through public funding.

• Disadvantages:

o Stringent regulations: Must comply with numerous legal and regulatory requirements (e.g., SEBI
regulations in India).

o Dilution of ownership: Control is distributed among public shareholders.

o Complex governance: Requires a board of directors, audits, and other formal governance structures.
 o Double taxation: Corporate profits are taxed, and shareholders are taxed on dividends.

o High cost of compliance: Listing fees, annual filings, and financial disclosures.

6. One Person Company (OPC)

• Advantages:

o Limited liability: Protects personal assets while retaining full control.

o Simple structure: Less paperwork and compliance compared to Pvt Ltd.

o Perpetual succession: Continues even if the owner dies (subject to nominee arrangement).

o Suitable for solo entrepreneurs: No need for partners or shareholders.

o Lower regulatory burden: Fewer compliance requirements than other corporate entities.

• Disadvantages:

o Limited to one shareholder: Cannot expand ownership.

o Cannot raise equity capital: No scope for raising funds by issuing shares.

o Limited scalability: Growth is constrained by the single-owner structure.

o High taxation: OPC is taxed similarly to Pvt Ltd companies.

o Restrictions on expansion: Can only convert to Pvt Ltd if turnover exceeds a threshold.

7. Cooperative Society

• Advantages:

o Democratic control: Each member has equal voting rights (one member, one vote).

o Limited liability: Members are not personally liable for cooperative debts.

o Profit-sharing: Surplus distributed based on member participation.

o Social objectives: Focus on mutual benefit and community welfare.

o Government support: Often receive grants or subsidies to promote social welfare.

• Disadvantages:

o Limited growth potential: Relies on member contributions and participation.

o Slow decision-making: Consensus-building in a democratic structure can be slow.

o Dependent on active participation: Success depends on the involvement of members.

o Limited resources: Difficult to raise large amounts of capital.

o Management issues: Elected leadership may lack business expertise.

8. Section 8 Company (Non-Profit)

• Advantages:

o Tax exemptions: Eligible for various tax benefits under charitable status.
 o Can receive donations: From individuals, companies, and international donors.

o Limited liability: Members are protected from personal risk.

o Social impact: Focus on charitable objectives (education, healthcare, etc.).

o Grants and funding: Eligible for government and NGO funding.

• Disadvantages:

o Cannot distribute profits: Any surplus must be reinvested in the organization.

o Strict regulatory scrutiny: Must prove charitable intent and avoid profit-making activities.

o Higher compliance requirements: Subject to detailed financial audits and regulatory checks.

o Limited access to capital: Cannot raise equity capital through shares.

o Complex registration: Requires government approval and adherence to specific charitable