A sole proprietorship is a business entity that is owned, managed and controlled by one person. It is one of the most popular forms of business in India, used by small businesses operating in mostly the unorganized sectors. Proprietorship firms are very easy to start and have very minimal regulatory/statutory compliance. A proprietorship firm can be established by getting a tax registration or a license based on the nature of business and there is no specific registration of the ‘proprietorship’ itself.

The liability of each partner is limited to the capital he/she has contributed. It has all the features of ease and flexibility of a general partnership and provides an improvement in the form of limited liability.

An LLP Agreement must be executed between the partners detailing the name of the LLP, business to be conducted, names and details of each partner along with intimation of who are the designated partners, the profit and loss sharing ratio and retirement and induction process for partners etc.

An LLP must have at least two partners and there is no ceiling on the maximum. One of the partners of the business must be a resident of India. There is no minimum capital required in private limited company and Rs.5 Lakhs in case of a public limited company.