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 Proprietorship | You own a business by yourself | 'P' |
| Partnership | You share business ownership with your partners | 'F' |
| Hindu Undivided Family (HUF) | You share the business ownership with your family unit | 'H' |
| Private or Public Limited | Your 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
- Public Company
- 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