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Legal Infrastructure for Business: Know Your Options

This section is meant to serve as a guide to anyone struggling to understand the legal structures of businesses and which one is appropriate for them.

If you haven’t studied business studies formally or had any contact with the legal world (which is understandable if you haven’t) then you might consider yourself ill-equipped to make these decisions.

A lot of young people, between the ages of 18 and 29 years are beginning to move into business. If you belong to this age group then chances of legal structures and planning intimidating you are high. Lucky for you, we are going to break down the four main categories for you.

Given below are the four types of legal structures that a business will fall under. Here we are giving brief definitions of each of them but a detailed explanation can be found in the next few sections. We have dedicated one blog to each type for better understanding.

Four Legal Structures:
⦁ Sole proprietorship
⦁ Partnership
⦁ Private Limited Company
⦁ Public Limited Company

1. Sole Proprietorship

Sole proprietorship is when one person alone owns a business. So the founder will have complete rights and ownership of it all.

 

Here the complete investment will be made by that founder.

2. Partnership

 

This is when two or more people or put their resources together to start a business with shared ownership. Both of them are, therefore, in charge of the decision making process. There are different types of partnerships. They are discussed in detail in Blog # 19.

3. Private Limited Company

 

While there are partners in a company, it is different from a partnership in that the business functions as one single entity. Each partner’s share in the company and their share in profits and losses correspond with their investment.

⦁ Public Limited Company

 

This type of company offers shares to the public with limited liability. It is often started through meeting the minimum capital requirements of the Company Act. When you hear about people buying shares in companies, they are basically buying them in these public limited companies.

These are the four types in a nutshell.

For a detailed explanation of the individual types take a look at the following blogs and you will find one blog per topic that should hopefully make all aspects of that structure clear.

We try to keep these blogs as accessible as possible, but if you have questions about anything discussed here, please feel free to ask!

This section is meant to serve as a guide to anyone struggling to understand the legal structures of businesses and …

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