Private Limited vs Partnership vs Proprietership

Posted by fshsfhsfh on Friday, March 25, 2011

How do you legally set up your restaurant company? You talk to an accountant and they will advise you - the trouble is that the advice may be more beneficial for the accountant than for you - i.e. they will try and make you set up a Private Limited company (the advice will be that in the long run it will help, especially if you get external investors - what they won't tell you openly is that you can always convert your partnership firm/proprietorship concern to a private limited company quite easily, if and when the need arises, )

For newbies, I would strongly urge you to launch your venture as a partnership firm or as a proprieter concern. Both of these options will cost you less, require very minimal paperwork upfront and more importantly very little compliance/reporting requirements on an ongoing basis. Plus for a restaurant business, there is nothing operationally that you can't do as a partnership firm/proprietership concern. As a private limited company, you will need to file annual returns and audit your finances - all of these cost you money and will require painful documentation effort - while you are focusing on getting customers and your business in order, the last thing you want to is to spend time with documentatiion.

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