There are several legal entities that are eligible for startups in India, depending on the business model and the requirements of the entrepreneurs.
Sole Proprietorship: It is the simplest form of business structure where a single individual owns and operates the business. It does not require any registration and legal formalities, and the proprietor has unlimited liability for the business debts and losses.
Partnership: It is a business structure where two or more individuals share the ownership and management of the business. It can be registered or unregistered, and the partners have joint liability for the business debts and losses.
Limited Liability Partnership (LLP): It is a hybrid business model that combines the benefits of partnership and limited liability company. It offers limited liability protection to its partners and can be registered with the Ministry of Corporate Affairs (MCA).
Private Limited Company: It is one of the most preferred legal entities for startups in India. It requires a minimum of two directors and shareholders and can be registered with the MCA. It offers limited liability protection to its shareholders and has a separate legal entity from its owners.
Public Limited Company: It is a legal entity that can offer shares to the public and can be listed on the stock exchange. It requires a minimum of seven directors and shareholders and compliance with the Securities and Exchange Board of India (SEBI) regulations.
One Person Company (OPC): It is a new concept introduced in the Companies Act 2013, where a single individual can form a private limited company. It offers limited liability protection to its owner and has a separate legal entity from its owner.
In conclusion, the legal entity for a startup in India depends on the business requirements, investment, and growth plans. However, entrepreneurs must be aware of the legal formalities and compliances required for each legal entity before choosing the right structure for their business.
