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Types of Business in India

Have a look at your company PAN if you are not sure about your business type. The fourth character in your PAN indicates your business type.

Business Type:Choose if:PAN (Fourth Character)
Sole ProprietorshipYou own a business by yourself'P'
PartnershipYou share business ownership with your partners'F'
Hindu Undivided Family (HUF)You share the business ownership with your family unit'H'
Private or Public LimitedYour business assets are separated from personal assets'C'

  • HUF (Hindu Undivided Family)
    • Formed by birth in a Hindu family
    • The family pool of resources
    • Family members are automatic co-owners
    • Head of the family (Karta) is the decision maker
    • The Karta has unlimited liability

  • LTD/PVT LTD (Public Limited or Private Limited)
    • Public Company
      • Minimum members = 7, maximum members = no limit, and a minimum of three directors
      • Shares are freely tradeable on the stock exchange through a listing
    • Private Company
      • Minimum members = 2, maximum members = 200, and a minimum of two directors
      • Certain restrictions on the transfer of shares
      • Once incorporated, the company can start the business

  • LLP/Partnership (Partnership or Limited Liability Partnership)
    • Two or more persons can start a partnership firm (maximum 20)
    • Limited liability of each partner. Liability of all partners is joint and several
    • No personal liability of any partner (except in the case of fraud)
    • It is a legal entity and is separate from its partners
    • No maximum limit on the number of partners

  • Proprietorship (Sole Owner)
    • Sole provider of capital
    • The sole bearer of risks
    • Unlimited liability