Business Registration in Kochi, Cochin, Ernakulam
Choose the right form of business – Company, Firm, LLP, Trust, AOP and BOI
There are different organization types conducting businesses with a purpose. There is partnership, proprietary business, a trust, a corporate business, or cooperatives, all as a company. Each organization is expected to fulfill a few responsibilities to run a business successfully. A trust and a company are two different organizations following a set of attributes. They are for different purposes and feature different characteristic with respect to set-up, control, and assets.
Trust is an organization or a firm featuring trustees acting as administrators. They carry out the fiduciary duties and also work as financial assets agents for another business. A trust involves the responsibility to manage and oversee an asset or a grantor. A trust is formed usually when the trust creator or a grantor feels his organization can be better handled and managed than doing it individually. Only 15% of gross receipts of a trust will be liable income tax provided they have taken a 12A registration.
- A trust has its assets as tangibles and non-intangible, and owns the assets placed in a trust by the grantors. An irrevocable trust is when the deed terms cannot be altered and the grantor loses assets control. However, the trust does not have complete control on the assets, but is expected to act with loyalty and care as its fiduciary duty. Thus, it retains limited assets control. A trust can manage the assets only as per the trust terms. In case the grantor dissolves the trust, it loses the authority of managing the assets.
- A trust provides protection to a grantors properties and assets by managing the investment, record keeping, paying bills, medical expenses, and charitable gifts, etc. The grantor picks a trust based on the trust services such that an investment management firm can be a grantors or trustees shares, bonds, or retirement accounts. A bank acts also can act as a trustee for account checking, deposit accounts certificate, and the grantors savings account. Trusts include employee’s expert in asset management
Firm
A partnership firm could be a kind of business during which a group of individuals, additionally referred to as partners, bound by a partnership deed. However, a partnership firm isn’t thought-about to be a separate legal entity. Partners share all the profit and losses amongst one another. there’s a vast liability given to all or any the partners. To become a partner during a partnership firm you’ll need sure things as mentioned below.
To become a partner you wish to be a significant and will be of sound mind. you ought to not be disqualified from acquiring in any method by the law. but a minor also can become a partner. In such a case state of affairs, all the partners ought to offer their consent. The minor won’t be able to participate within the workings, however, he are entitled to the advantages of a partnership. he’s in person not answerable for any act. He cannot sue different partners anyhow.
The following can enter into a partnership by law:
- An Individual
- A firm (which is recognized as a separate legal entity by law)
- A company
- A Trustee
- The main member (Karta) of a Hindu Undivided Family
Applicable tax rate -30% on the profits earned
LLP
LLP refers to Limited Liability Partnerships. These can combine partnership features and business form. The LLP concept is introduced from 2009. This concept combines the advantages of the Partnership and Company into a single organization. In LLP, all partners are individually responsible for their negligence or misconduct and works same as company shareholders. However, same as the company shareholders, partners manage the business, but limits personal liability of a partner for incompetence, errors, negligence or omissions. The advantages include:
- Easy to establish as separate legal entity
- Flexibility without imposing procedural and legal requirements
- Renowned internationally as business form
- No restrictions as to the partners number
- Personal assets of partners are not exposed in fraud
- Partners are not responsible for other partners act
- No need to maintain other records, but for books of accounts
- Easy to wind-up or dissolve
- Less formation cost
- Applicable tax rate -30% on the profits earned
- There is no mandate of AGM or Board meetings to be conducted
- Statutory Audit of accounts is mandatory for Companies in India whereas Statutory Audit is mandatory for LLPs if their turnover is more than INR 40 Lakhs or their contribution is more than INR 25 Lakhs.
AOP represents Association of persons and BOI represents Body of Individuals. AOP and BOI refer to two different people arrangements. The fact is that both these expressions are used interchangeably at times, and actually it does not justify the interpretation. There is a need to stop interchanging these words usage as they are different compositions.
AOP as per Income Tax Act is an integration of persons for a common purpose or mutual benefit. While BOI is same as AOP, that has an accumulation of individuals coming together with the key objective of earning income.
A person in AOP may be an individual person or a company. A person may include any body of individuals, association, or company, regardless of whether it is built-in as incorporated or not. In a BOI, individuals can join to earn some income. BOI comprises of individuals, while AOPincludes legal entities.
AOP is an association of persons having a legal meaning. It symbolizes the duties and rights of a unit. For instance, in a train a group of people travelling or even at a bus stop waiting for a bus, may be a group of people or body of individuals (BOI). However, in legal sense, they are not Association of persons (AOP).
An AOP represents a combination of individuals, but remember it does not indicate or imply that a group of persons or any combination forming a group is an AOP. It is the individuals that associate with any activity to produce income are referred to as an AOP.
- AOP may consist of non-individuals but in BOI, only individuals may Consist BOI.
- In case of AOP a combined will is involved to engage in an activity that is income producing. But in BOI, it may or may not be a combined will. In simple words, people who do nothing, may be a BOI but cannot be termed an AOP.
Society
A co-operative society is associate autonomous association of persons united voluntarily to satisfy their common economic, social and cultural wants and aspirations through a jointly-owned and democratically-controlled enterprise.Co-operative Societies Act under which the same is registered whether it be under state Act or Cental Act.Bye-laws approved by the registrar at the time of registration and amendments made from time to time and approved by the registrar, these bye-laws have to be formed by the concerned members themselves and present it to the registration authority for its approval. Every member shall have a single vote irrespective of their holding
A co-operative society is another means that for forming a legal entity to conduct business besides forming an organization. It pools along human resources within the spirit of self and mutual facilitate with the item of providing services and support to members.