Introduction

Choosing the right business structure is one of the most important decisions for an entrepreneur. It affects everything—from compliance requirements and taxation to ownership flexibility, credibility, and fundraising opportunities.

In India, the four common business models are Proprietorship, Partnership Firm, LLP (Limited Liability Partnership) and Private Limited Company. Each structure offers unique advantages and limitations.

This guide by Bisways Consulting Group provides a detailed comparison to help entrepreneurs choose the model best suited to their goals, risk appetite, and growth plans.

What Is a Proprietorship?

A Sole Proprietorship is the simplest form of business owned and controlled by one individual.

Key Features

• No separate legal entity

• Minimal compliance

• Taxed as an individual

• Easy to start and close

Best For

Small traders, freelancers, shop owners, and solo service providers.

What Is a Partnership Firm?

A Partnership Firm is formed when two or more individuals join together to carry out a business under a Partnership Deed.

Key Features

• Governed by the Indian Partnership Act, 1932

• Partners share profits and responsibilities

• Unlimited liability of partners

• Easier to form than LLP/CompanyF

Best For

Start-ups, scalable businesses, technology companies, exporters, and companies seeking investment.

Major Differences Between the Four Structures

1. Legal Status

• Proprietorship: No separate legal entity

• Partnership: Registered/unregistered; not separate from partners

• LLP: Separate legal entity

• Private Limited Company: Separate legal entity

2. Liability

• Proprietorship: Unlimited

• Partnership: Unlimited (partners jointly & severally liable)

• LLP: Limited to capital contribution

• Company: Limited to share capital

3. Compliance Level

• Proprietorship: Minimum

• Partnership: Low

• LLP: Moderate

• Company: High (mandatory audit, MCA filings, board meetings)

4. Taxation

• Proprietorship: Individual slab rates

• Partnership: Flat 30% + surcharge + cess

• LLP: Flat 30% + surcharge + cess

• Company: 22% (domestic companies), reduced rates available

5. Startup Funding Eligibility

• Proprietorship: Very limited

• Partnership: Limited

• LLP: Moderate

• Company: Highly preferred by investors

6. Ideal Business Size

• Proprietorship: Micro/small

• Partnership: Small/medium

• LLP: Medium

• Company: Medium/large/high-growth

Comparison Table

Which Structure Should You Choose?

Choose Proprietorship if you want:

• Very low cost setup

• Simple operations

• No complex compliance

Choose Partnership if you want:

• Joint ownership

• Simple structure

• Flexibility without corporate rules

Choose LLP if you want:

• Professional setup

• Limited liability

• Lesser compliance than a company

Choose Private Limited Company if you want:

• High brand credibility

• Expansion, investment, or funding

• Full corporate governance

Conclusion

India offers multiple business structures to match the needs of entrepreneurs. Whether you are a solo business owner, professional partnership, or high-growth startup, selecting the right structure ensures smoother operations, tax efficiency, compliance, and scalability.

Bisways Consulting Group assists founders with business setup, legal registration, taxation, and compliance across all four models — ensuring your business starts on the right foundation.