One of the crucial decisions to be undertaken by an entrepreneur is to choose the right form of business structure. This is because the business structure determines power, control, risk and responsibility of the entrepreneur. Further, such a decision also determines the distribution of profits and losses. Also, the form of business structure influences the growth and success of the entity.
Additionally, it is quite challenging to transform into another business structure once an entrepreneur decides the type of business entity. This is because there is too much legal compliance as well as procedures that need to be followed to wind up a business. Furthermore, it will result in loss of business opportunity, capital and employment. Therefore, an entrepreneur needs to put in a lot of thought before choosing between different types of business structures.
These structures include:
- Sole Proprietorship
- Hindu Undivided Family
- Limited Liability Partnership
- Branch Office
- Cooperative Societies and
This article talks about the simplest and most popular form of business entity, that is, a sole proprietorship. So let’s consider the following case study before we discuss sole proprietorship registration and other aspects related to it.