NOT financial advice - seek advice from a professional for your specific situation

    TaxKiln

    Choosing your business structure

    Founders and self-employed people deciding how to set up, or whether to change structure as they grow.

    Your business structure decides how you are taxed, what you have to file, and how exposed your personal assets are. A sole proprietorship is the simplest and pairs with presumptive taxation, but offers no liability protection. A partnership or LLP shares ownership and (for an LLP) limits liability. A private limited company brings limited liability and salary-versus-dividend planning but heavier compliance. A Hindu Undivided Family is a distinct tax entity with its own PAN and exemption. This hub walks through each and when to move up the ladder, without the venture-studio framing, most self-employed people start as a proprietor and only incorporate when the numbers and liability justify it.

    Last reviewed:

    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

    Guides in this hub

    Liability vs simplicity

    The core trade-off: a proprietorship is simple and cheap to run but leaves your personal assets exposed; an LLP or company protects personal assets but adds annual filings, audit thresholds and ROC compliance. Match the structure to your real liability risk and turnover, not to ambition.

    When to incorporate

    Incorporation usually makes sense when profits are high enough that salary-versus-dividend planning saves real tax, when liability exposure is material, or when clients or investors require a company. Below that, the compliance cost of a company often outweighs the benefit, and a proprietor on presumptive taxation is simpler and cheaper.

    Calculators for this topic

    Last reviewed: