On your marks! Let’s Start up.


If you are planning to start a new venture in India it is important to clearly understand various kinds of business vehicles which are available and identify the best one to suit your requirement. There are different types of business vehicles and each one is having its own purpose, advantages and disadvantages. In this article, I am trying to resolve the complexity involved in identifying the right kind of business vehicle and help you to choose the best out of it. Whenever a person approaches me to start a new business, I usually spends some quality time with them to understand their exact requirement and identify the following areas in particular. Once these queries are properly answered by them, I would be able to figure out the entity which they are in need of.

  1. Is the proposed business is capital intensive?

  2. If yes, what is the source of bringing the required capital?

  3. How many persons will contribute towards the capital?

  4. Will the business requires any kind of Loan?

  5. Is there a foreign investor in the proposed investors list?

  6. What are the risks involved in the business?

  7. Will the nature of the business is extending any kind of harm to outsiders or third parties?

I would like to depict the suitability of an entity based on various factors in the below given table. Please note that the same is not to be applied as a hard and fast rule and to be applied in very logical manner to arrive at suitable solutions. A seasoned and experienced professional will be able to guide you through the process and assist you in choosing the right type of entity.

Once the correct type of entity is identified the next step is to incorporate the entity in which the legal formalities as mentioned in the Companies Act to be strictly observed. You don’t have to worry about those aspects as the same will be shouldered by your consultant. Once the said process is completed you can start the normal business activities and also take steps to obtain industry specific registrations and licences.

Article 2 of Start Up Series 1.