Types of Trademark: A Comprehensive Guide

Jan 28, 2025
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A trademark is a unique identifier, such as a word, symbol, or design, that distinguishes the goods or services of one business from another. It plays a vital role in helping consumers identify the origin of products or services, ensuring authenticity and trust. 

There are different types of trademarks, including product marks, service marks, collective marks, and more. Each type serves a specific purpose, offering businesses a way to protect their intellectual property and enhance brand recognition. This article will explore the various categories of trademarks, their significance, and how they can be applied to businesses.

Table of Contents

Product Mark

A product mark is a kind of trademark used exclusively on goods, helping consumers identify the origin of the product and ensuring its authenticity. It plays a crucial role in distinguishing one business's goods from another, contributing to brand recognition and reputation.

Product marks fall under trademark classes 1 to 34, which categorise various types of goods, including chemicals, machinery, and textiles. For example, the "Nike" logo on shoes is a product mark that signifies the brand's origin and quality. 

Service Mark

A service mark is a trademark used to distinguish one business's services from those offered by others. Unlike product marks, which apply to goods, service marks highlight the origin and quality of services, helping customers identify and trust a particular service provider.

These marks typically fall under trademark classes 35 to 45, covering various services such as advertising, financial services, and hospitality. For instance, the "Taj Hotels" emblem represents a service mark that signifies premium hospitality services. 

Collective Mark

A collective mark is a type of trademark used to identify goods or services offered by members of a group, association, or institution. It ensures that the products or services meet specific quality or ethical standards set by the organisation holding the mark.

These marks distinguish the collective efforts of a group rather than an individual business. For example, the Chartered Accountant (CA) designation in India serves as a collective mark in trademark, representing professionals certified by the Institute of Chartered Accountants of India (ICAI).

Certification Mark

A certification mark is a symbol used to certify that a product meets specific standards related to origin, material, quality, or manufacturing methods. It guarantees that the certified product complies with established benchmarks, regardless of the owner’s business.

Certification mark examples include the "ISI" mark on electrical appliances and the "Agmark" label on food products in India, both of which assure consumers of quality and safety. Such marks are commonly found on food, electronics, and toys.

Shape Mark

A shape mark protects the distinctive shape of a product, enabling consumers to associate it with a specific brand. It ensures that unique designs contributing to a product's identity remain exclusive to the brand. For instance, the iconic contour shape of Coca-Cola bottles and the unique design of Fanta bottles are classic examples of shape marks that enhance brand recognition and trust.

Pattern Mark

A pattern mark protects distinctive designs or patterns used on a product to set it apart from competitors. To qualify, the pattern must be unique and easily recognisable—generic or common patterns are often rejected. For example, the well-known Burberry check pattern on their clothing and accessories is a classic pattern mark that helps identify the brand.

Demonstrating the uniqueness of the pattern is essential for successful registration, as it ensures the design remains exclusive to the brand, reinforcing its identity in the market.

Sound Mark

A sound mark is a unique audio signature linked to a product or service, allowing consumers to identify its origin through sound. It plays a significant role in branding, often used as an audio mnemonic in advertisements. A well-known example in India is the IPL tune, which instantly evokes recognition of the Indian Premier League.

Arbitrary and Fanciful Trademarks

Arbitrary and fanciful trademarks are distinct categories that stand out for their unique qualities. A fanciful mark is a made-up term or word with no prior meaning, making it highly distinctive and easy to register. For example, "Google" and "Kodak" are fanciful marks, as these words were coined specifically for the brands and have no inherent connection to their respective products.

On the other hand, an arbitrary mark uses a commonly known word but has no direct relation to the product or service it represents. "Apple," for instance, is an arbitrary mark since it’s a well-known word but doesn’t link directly to computers or electronics. 

Geographical Indications (GI)

A Geographical Indication (GI) is not a type of trademark but a separate form of intellectual property protection. It denotes a product’s specific geographic origin and assures consumers of its quality or reputation linked to that region. GIs help preserve the uniqueness of products tied to their location. For example, "Darjeeling Tea" and "Banarasi Silk" are GIs that signify the products’ origins and qualities unique to those regions.

How to Choose the Right Type of Trademark?

  1. Assess the Nature of Your Product/Service

    Determine the characteristics and qualities of your product or service. Understanding its nature helps in choosing the appropriate trademark type. For instance, if your product has a unique shape or design, a shape mark could be suitable. If your service stands out for its quality or reputation, a service mark might be more fitting.
  1. Focus on Branding Goals and Industry Standards

Consider your branding goals—whether you aim to build recognition, guarantee quality, or differentiate your offering. Also, take into account industry practices.

For instance, if you're part of a group or association, a collective mark might be more suitable, whereas a certification mark may be necessary for products requiring quality assurance. Ensure that the trademark aligns with your long-term branding strategy.

  1. Consult a Trademark Expert if Necessary

If you are uncertain about which trademark suits your business, it’s advisable to consult a trademark expert. They can assess your product or service and guide you on the best trademark type based on legal requirements and market needs. This ensures that your trademark selection is legally sound and provides optimal protection.

Examples of Trademarks in Action

  1. Food Industry

    Pepsi uses a product mark that consists of its distinctive logo, which is instantly recognisable by its red, white, and blue colour scheme. This trademark is essential in helping customers identify the Pepsi brand in a competitive market filled with various soft drink options. The product mark not only includes the logo but also the unique design of its packaging, ensuring that every Pepsi product stands out on store shelves.
  1. Fashion Industry

Louis Vuitton has trademarked its iconic monogram pattern as a pattern mark. This pattern, featuring the “LV” logo repeated across their products, is instantly recognisable worldwide. The distinctive design appears on bags, luggage, and other luxury accessories, making it a signature of high-end fashion.

By using this pattern mark, Louis Vuitton differentiates itself from other brands and maintains its status in the luxury market, ensuring that customers associate the design with quality and exclusivity.

  1. Technology Industry

    The name Microsoft is a suggestive mark. It combines “microcomputer” and “software,” hinting at its products (software for small computers) without explicitly describing them. Suggestive marks require consumers to make a mental connection between the name and the product or service.


This type of trademark is distinctive while maintaining a subtle association with the brand's offerings, making it a powerful branding tool in the technology sector.

  1. Hospitality Industry

    Marriott International uses a service mark to represent its brand and distinguish its services in the hospitality industry. The service mark covers not only the name “Marriott” but also its reputation for providing high-quality customer service, luxury, and a wide range of hospitality offerings.

From hotels to resorts, Marriott’s service mark assures customers of a consistent experience, helping the brand stand out in the competitive world of hotels and travel.

Frequently Asked Questions

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Frequently Asked Questions

What are the different types of trademarks?

The different types of trademarks include product marks, service marks, collective marks, certification marks, shape marks, pattern marks, and sound marks etc. 

What are 2 examples of a trademark?

Two examples of trademarks are the "Nike" swoosh logo, representing the brand's sportswear and footwear, and the "Apple" logo, symbolising the technology company's products like iPhones and Macs. 

What are the different types of IPR?

Intellectual Property Rights (IPR) include copyrights, trademarks, patents, designs, and geographical indications (GI). These rights help protect the creations and innovations of individuals or businesses, ensuring legal protection and exclusivity.

What is the full form of TRIPS?

TRIPS stands for Trade-Related Aspects of Intellectual Property Rights. It is an international legal agreement that sets minimum standards for protecting and enforcing intellectual property rights across countries.

How to register a product mark in India?

To register a product mark in India, you need to select a trademark agent (if not based in India), choose a distinctive mark and relevant class, and conduct a search for availability. Then, file the application with the required documents and fees. The application will be examined, published for opposition, and, if no objections arise, it will be registered for 10 years.

Benefits of having a service mark for your business

A service mark helps protect your business’s identity and reputation in the market. It distinguishes your services from competitors, boosts consumer confidence, and provides legal protection against imitation. 

What is a collective mark and how does it work?

A collective mark is a trademark used by members of a group, association, or organisation to signify that the goods or services meet certain standards the collective owner sets. It helps distinguish products or services from those of non-members, ensuring quality and origin.

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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Startup India Scheme: Eligibility Criteria, Benefits & Application Details

Startup India Scheme: Eligibility Criteria, Benefits & Application Details

The Startup India Scheme is a flagship initiative by the Government of India aimed at fostering entrepreneurship, innovation, and economic growth. Launched in 2016, this scheme provides startups with financial assistance, tax exemptions, and regulatory benefits to help them scale efficiently. This blog explores the eligibility criteria, benefits, and application process to guide aspiring entrepreneurs on leveraging this initiative for their business growth.

Table of Contents

Definition of "Startup"

As per the Startup India Scheme, a "Startup" is defined by the following criteria:

  • The entity should be incorporated as a Private Limited Company, a Limited Liability Partnership (LLP), or a Registered Partnership Firm.
  • The age of the company should not exceed 10 years from the date of incorporation.
  • The annual turnover should not exceed INR 100 crore in any of the financial years since incorporation.
  • The business should be working towards innovation, improvement of products/processes/services, or scalable business models with high potential for employment generation and wealth creation.
  • Startups should be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) to avail of scheme benefits.

What Is the Startup India Scheme?

The Startup India Scheme was launched in 2016 with the objective of encouraging entrepreneurship, generating employment, and fostering innovation. This initiative is managed by the Department for Promotion of Industry and Internal Trade (DPIIT) and aims to position India as a global startup hub by offering regulatory support, funding access, and tax exemptions.

Why Was Startup India Launched?

India has always been home to entrepreneurs, but before 2016, starting and scaling a business came with significant roadblocks- complex regulations, limited funding options, and restricted market access. Recognising this, the Government of India launched the Startup India initiative on January 16, 2016, to create a more supportive ecosystem for startups.

Here’s why the initiative was needed and how it helps:

  • Reducing Bureaucratic Hurdles
  • Easing Financial Constraints
  • Encouraging Job Creation & Innovation
  • Enabling Market Access & Growth
  • Creating a Culture of Entrepreneurship

Since its launch, over 100,000 startups have been recognised under the scheme, creating jobs, driving innovation, and strengthening India’s position as a global startup hub.

Top Features Of the Startup India Scheme

The Startup India Scheme offers multiple benefits to startups, including:

  • Tax Exemptions: Startups are eligible for a three-year income tax exemption.
  • Funding Support: Access to government funds and venture capital assistance.
  • Simplified Compliance: Reduced regulatory burden with self-certification for labour and environmental laws.
  • Fast-Tracked Patent Registration: Reduced fees and faster processing for patent applications.
  • Networking Opportunities: Participation in government-organised startup festivals and events.
  • Access to Government Tenders: Startups receive preference in public procurement without prior experience requirements.

Eligibility Criteria for the Startup India Scheme

To be eligible, startups must meet specific criteria set by the Department for Promotion of Industry and Internal Trade (DPIIT).

Here’s a detailed breakdown of the eligibility requirements:

  • Be incorporated as a Private Limited Company, LLP, or a Registered Partnership Firm.
  • Be less than 10 years old from the date of incorporation.
  • Have an annual turnover not exceeding INR 100 crore.
  • Focus on innovation, scalability, and employment generation.
  • Obtain DPIIT recognition for startup status.

Types of Organisations Eligible For the Startup India Scheme

The following entities qualify for the scheme:

  • Private Limited Companies: Must be registered under the Companies Act, 2013.
  • Limited Liability Partnerships (LLPs): Must be registered under the LLP Act, 2008.
  • Registered Partnership Firms: Must be incorporated under the Indian Partnership Act, 1932.

How to Register Your Startup with the Startup India Scheme

Step 1: Incorporate Your Business

Before applying for Startup India recognition, you must officially register your business as a legal entity. Your startup can be incorporated as one of the following:

  • Private Limited Company – Register under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA).
  • Limited Liability Partnership (LLP) – Register under the Limited Liability Partnership Act, 2008 with the MCA.
  • Partnership Firm – Register under the Indian Partnership Act, 1932 with the respective state authority.

Step 2: Register Under the Startup India Scheme

Once your business is incorporated, you can apply for recognition under the Startup India initiative by following these steps:

  • Visit the Startup India portal www.startupindia.gov.in
  • Click on "Register" and create an account.
  • Log in and navigate to “Recognition” → “Apply for DPIIT Recognition”.
  • Fill in the application form with details about your business.

Step 3: Apply for DPIIT Recognition

To get official recognition as a startup, you must apply for DPIIT (Department for Promotion of Industry and Internal Trade) recognition. DPIIT-recognised startups gain access to tax benefits, easier compliance, and funding opportunities.

Steps to Apply for DPIIT Recognition:

  • Provide business details (name, incorporation date, industry sector, location).
  • Describe your startup’s innovation, scalability, and market potential.
  • Upload supporting documents (explained in Step 5).
  • Submit the application for review.

Step 4: Recognition Application Submission

Once all details are filled in, submit the Startup India recognition application.

The DPIIT reviews applications to ensure the business meets eligibility criteria (e.g., age of the startup, turnover, and innovation focus). If all documents are in order, recognition is granted within 2-3 weeks.

Step 5: Documents Required for Registration

You must upload specific documents during the registration process. Ensure you have:

Mandatory Documents:

  • Certificate of Incorporation / Registration – Proof that your business is legally registered.
  • Detailed Business Description – A document explaining how your startup is innovative and scalable.
  • PAN (Permanent Account Number) – A copy of your business’s PAN card for tax purposes.

Additional Documents (If Applicable):

  • Patent or Trademark Details – If your startup has intellectual property rights, submit supporting documents.
  • Letter of Recommendation (Optional) – From an incubator, industry expert, or recognised institution supporting your innovation.

Step 6: Get Your Recognition Number

Once your application is approved, you will receive a Startup Recognition Number from DPIIT. This confirms that your business is officially recognised under Startup India and is eligible for various benefits.

Step 7: Some Other Important Things To Follow

  • Ensure compliance with tax laws and regulatory requirements.
  • Utilise government schemes and incentives to scale operations.

Benefits From DPIIT

Startups recognised under DPIIT receive several benefits, including:

  • Tax exemptions under Section 80 IAC of the Income Tax Act.
  • Easier access to government grants and funds.
  • Self-certification for labour & environmental laws, reducing compliance costs.
  • Simplified compliance and faster patent approvals.
  • Gain visibility through Startup India showcases and events.

Advantages of the Startup India Scheme

  • Financial Support: Grants, loans, and venture capital funding assistance.
  • Regulatory Benefits: Self-certification for labor and environmental laws.
  • Tax Relief: Exemption from income tax for 3 years.
  • Market Access: Access to government tenders and public procurement schemes.
  • Networking Opportunities: Participation in startup events and mentorship programs.

Conclusion

India is rapidly becoming a global hub for startups, and the Startup India Scheme is at the heart of this transformation. By nurturing innovation, job creation, and economic development, the initiative is shaping the future of entrepreneurship in India.

Frequently Asked Questions

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Frequently Asked Questions

When was the Startup India Scheme launched?

The Startup India Scheme was launched on January 16, 2016, by the Government of India to promote entrepreneurship, innovation, and economic growth.

Who is eligible for the Startup India Scheme?

To be eligible for the Startup India Scheme, a business must:

  • Be registered as a Private Limited Company, Limited Liability Partnership (LLP), or a Registered Partnership Firm.
  • Be less than 10 years old from the date of incorporation.
  • Have an annual turnover not exceeding INR 100 crore in any financial year.
  • Be working towards innovation, improvement, or development of a scalable business model.
  • Obtain recognition from the Department for Promotion of Industry and Internal Trade (DPIIT).

Is Startup India Tax-Free?

Startups registered under the Startup India Scheme and recognised by DPIIT are eligible for a three-year income tax exemption under Section 80-IAC of the Income Tax Act. Additionally, they benefit from exemptions on capital gains tax and angel tax under certain conditions.

What are the Startup India benefits?

The key benefits of the Startup India Scheme include:

  • Tax exemptions: Three-year income tax holiday and angel tax exemption.
  • Financial support: Access to a ₹10,000 crore Fund of Funds for investment.
  • Simplified compliance: Self-certification for labour and environmental laws.
  • Faster patent registration: 80% rebate on patent filing fees with expedited processing.
  • Networking and mentorship: Opportunities through startup hubs, incubators, and accelerator programs.

How does the Startup India Scheme support new businesses?

The Startup India Scheme supports new businesses by:

  • Providing financial assistance through government-backed funds and venture capital access.
  • Offering tax benefits to reduce financial burdens in the early years.
  • Simplifying regulatory processes, making compliance easier.
  • Fast-tracking intellectual property rights (IPR) registrations for startups.
  • Creating networking opportunities through startup events, incubators, and accelerator programs.
  • Facilitating ease of doing business with relaxed norms and exemptions from various government regulations.

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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Appointment of Company Secretary: Roles and Responsibilities Explained

Appointment of Company Secretary: Roles and Responsibilities Explained

When building a company, compliance is not just a checkbox- it’s the backbone that ensures smooth functioning, legal validity, and market trust. Among the key professionals steering compliance, the Company Secretary (CS) plays one of the most critical roles.

This blog discusses the appointment of a Company Secretary in India, their roles, responsibilities, eligibility criteria, and the complete procedure for appointment and removal, as guided by the Companies Act, 2013.

Table of Contents

Who is a Company Secretary?

A Company Secretary (CS) is a key managerial professional responsible for ensuring that a company complies with legal, regulatory, and governance requirements. In India, a Company Secretary serves as the compliance officer, legal advisor, and corporate governance guide.

The core duties include:

  • Overseeing compliance under the Companies Act, 2013
  • Drafting, filing, and maintaining legal documentation
  • Facilitating communication between the board of directors and shareholders
  • Distributing dividends and handling investor relations
  • Maintaining statutory records and registers
  • Organising and recording minutes of board and shareholder meetings
  • Drafting policies and internal documents for the company
  • Ensuring compliance with stock exchanges (for listed companies)
  • Managing corporate actions like mergers, acquisitions, and restructuring

Eligibility Criteria of a Company Secretary

To qualify as a Company Secretary in India:

  • One must pass the ICSI (Institute of Company Secretaries of India) exam and hold an active membership with ICSI.
  • Listed companies are required to appoint a full-time Company Secretary.
  • Public and private companies with paid-up share capital of ₹10 crore or more must mandatorily appoint a whole-time CS.

This ensures that companies above a specific size have strong compliance and governance oversight.

Importance of the Company Secretary in the Business Environment

A Company Secretary is more than a compliance officer—they are strategic advisors who ensure a business operates within legal frameworks while fostering governance and ethical practices.

Key importance includes:

  • Ensuring compliance with corporate and securities law
  • Advising leadership on legal and governance risks
  • Playing a critical role in board meetings and influencing policy decisions
  • Building trust with investors, regulators, and the public through transparent reporting

By law, only those with ICSI membership or equivalent recognised qualifications can be appointed, ensuring professional credibility.

Functions of Company Secretaries

Under Section 205 of the Companies Act, 2013, the functions of a Company Secretary include:

  • Ensuring the company complies with the secretarial standards issued by ICSI
  • Reporting compliance status to the Board of Directors regularly
  • Performing duties as prescribed by the Companies Act and other applicable laws

This formalises their role as the company’s governance backbone.

Duties of a Company Secretary

According to Rule 10 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the duties of a CS include:

  • Guiding directors on their statutory responsibilities
  • Convening and recording minutes of board and general meetings
  • Ensuring approvals for company actions like the issue of shares, loans, or mergers
  • Representing the company before regulators, tribunals, and government bodies
  • Assisting the board in company affairs and decision-making. Ensuring compliance with corporate governance standards and best practices

Responsibilities of a Company Secretary in India

In India, a Company Secretary carries responsibilities that go beyond legal compliance:

  • Facilitating business operations by ensuring all approvals are in place
  • Conducting secretarial audits to verify compliance
  • Advising on corporate transactions such as mergers, acquisitions, and share issues
  • Promoting corporate governance through ethics, transparency, and accountability
  • Acting as a communication link between management, regulators, and investors

Rules of Company Secretary Appointment in India

As per Section 203 of the Companies Act, 2013, and Rules 8 & 8A:

  • Every listed company must appoint a whole-time Company Secretary.
  • Every public or private company with a paid-up share capital of ₹10 crore or more must also appoint a CS.
  • Smaller companies may appoint a CS, though it is not mandatory.

Company Secretary Appointment Procedure in India

The process for appointing a Company Secretary involves:

  1. Notifying directors through a Board Meeting under Section 173
  2. Passing a Board Resolution for the appointment
  3. Filing Form DIR-12 with the Registrar of Companies (ROC) within 30 days
  4. Submitting Form MGT-14 (where applicable) with prescribed fees
  5. Updating statutory registers as per Section 170 of the Companies Act, 2013
  6. For listed companies, informing the stock exchange about the appointment

Procedure for the Removal/Resignation of Company Secretary

If a Company Secretary resigns or is removed:

  • The company must hold a Board Meeting to pass a resolution
  • File DIR-12 with the ROC (and MGT-14 in the case of public or listed companies)
  • Inform stock exchanges in case of listed entities

Update the register of directors and key managerial personnel as per Section 170

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Frequently Asked Questions

Who appoints Company Secretaries?

The Board of Directors of a company appoints a Company Secretary through a board resolution. The decision is recorded in the company’s board meeting minutes.

What is Rule 8 of the appointment of a Company Secretary?

Under Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every public company with a paid-up share capital of ₹10 crore or more must appoint a whole-time Company Secretary.

Is MGT-14 required for the appointment of a Company Secretary?

Yes, the appointment of a Company Secretary is a board resolution, and filing of Form MGT-14 with the Registrar of Companies (ROC) is required under Section 117(3) of the Companies Act, 2013.

What is the time limit for appointing a CS?

The appointment of a Company Secretary must be made within 30 days from the date on which the company becomes legally obliged (i.e., when it crosses the prescribed paid-up capital threshold or is incorporated as a listed company).

Is it mandatory to appoint a Company Secretary?

  • For private limited companies: Appointment of a CS is not mandatory, regardless of share capital.
  • For public companies: It is mandatory to appoint a whole-time CS if the paid-up share capital is ₹10 crore or more.
  • For listed companies: Appointment of a CS is always mandatory.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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 Difference Between Company and Partnership

Difference Between Company and Partnership

Partnership vs company structures have distinct characteristics that entrepreneurs must consider when choosing a business model. While both enable individuals to collaborate and share resources, the difference between partnership and company lies in their legal structure, liability, management, and compliance requirements. This article delves into the key distinctions between these two business entities, helping you make an informed decision based on your venture's needs and goals.

Table of Contents

Difference Between Company and Partnership Firm

A company and partnership difference is rooted in their legal definitions and formation processes. A company is an incorporated entity under the Companies Act, 2013, with shareholders owning the business. Conversely, a partnership firm is an unincorporated association of individuals governed by the Indian Partnership Act, 1932, where partners collectively own and manage the business.

Here's a table highlighting the main differences:

Aspect Company Partnership Firm
Legal Entity Separate legal entity with authority to enter into contracts, own assets and is liable for its actions No separate legal entity with partners being personally liable for any debts and obligations
Governing Law Companies Act, 2013 Indian Partnership Act, 1932
Liability Limited for shareholders to the amount invested Partners have complete responsibility for all of the firm's debts and liabilities
Ownership Shareholders Partners
Management Board of Directors Partners
Taxation Corporate tax rates are applicable Partners taxed individually based on their income share
Compliance Complex legal compliance due to various legal formalities Much simpler legal requirements due to fewer legal formalities
Continuity Perpetual existence continues even after changes in ownership and management May be dissolved if a partner retires, withdraws, or dies in the absence of an continuity agreement

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Understanding a Company

Definition of Company

A company is a distinct legal entity formed by an association of people to carry on a business. The Indian Companies Act of 2013, Section 2(20), defines "company" as "a company incorporated under the Companies Act 2013 or any previous company law." Companies can be public or private, with private limited companies having 2-200 members and public companies having at least 7 members with no upper limit.

Types of Company

Here are the types of companies:

  1. Private limited company: A privately held company with 2-200 members, where the transfer of shares is restricted.
  2. Public limited company: A company that can invite the public to subscribe to its shares, with a minimum of 7 members and no upper limit.
  3. One Person Company: A company with only one member.

Characteristics of a Company

  • Separate legal entity
  • Limited liability for members
  • Perpetual succession
  • Transferable shares
  • Managed by Board of Directors
  • Stringent compliance requirements

Company registration involves a formal process, including filing Memorandum and Articles of Association, obtaining DIN for directors, and submitting requisite documents to the Registrar of Companies.

Understanding a Partnership Firm

A partnership firm is a business structure where two or more partners come together to run a business collectively. The partners share the profits and bear the losses of the business in the agreed proportion.

Definition of Partnership Firm

A partnership firm is a business structure formed by an association of two or more people who agree to share business profits. The Indian Partnership Act of 1932, Section 4, defines Partnership as "The relation between persons who have agreed to share profits of business carried on by all or any of them acting for all."

Partnerships can be general partnerships where all partners have unlimited liability, or limited liability partnerships (LLPs) with both general and limited partners. The key differences between a company and partnership relate to legal structure, liability, management, ownership transfer, regulatory compliance, and taxation.

Characteristics of a Partnership Firm

  • Formed by an agreement between partners
  • No separate legal entity from partners
  • Unlimited liability for partners
  • Profit sharing as per partnership deed
  • Jointly managed by partners
  • Fewer compliance requirements compared to companies
  • Ideal for small and medium-sized businesses

Similarities Between Company and Partnership Firm

Despite their difference between company and partnership firm, they share some common characteristics:

  • Formed for carrying on a business
  • Require registration with relevant authorities
  • Aim to earn profits
  • Governed by specific laws and regulations
  • Require maintenance of books of accounts
  • Can sue and be sued in their own name

Which One Should You Choose?

Choosing between a company and a partnership depends on business goals, liability, taxation, and compliance requirements. Below are hypothetical examples to help you decide.

1. Business Size & Growth Potential

  • Choose a Company: If you plan to scale your business, attract investors, or raise capital, a company structure is ideal.
    • Example: Raj and Meera start an AI-based edtech startup. They plan to raise funds from investors and expand globally. To do this, they register as a private limited company and issue shares to investors.
  • Choose a Partnership: If you prefer a small-scale business with direct decision-making, a partnership is a better choice.
    • Example: Aarav and Kunal start a custom furniture workshop in their city. Since they don’t need external funding and want to split profits equally, they form a partnership firm.

2. Liability Protection

  • Company: Offers limited liability, meaning the owners’ personal assets are protected in case of losses.
    • Example: Neha runs an organic skincare brand. A customer files a lawsuit over an allergic reaction. Since Neha's business is a registered company, her personal assets remain safe, and only the company’s assets are at risk.
  • Partnership: In a general partnership, partners have unlimited liability, meaning personal assets can be used to settle business debts.
    • Example: Vikram and Ramesh own a small event management business. They take a loan for an event but incur heavy losses. As a partnership, both partners are personally responsible for repaying the loan, even if it means selling personal assets.

Note: In a Limited Liability Partnership (LLP), personal liability is restricted.

3. Taxation Structure

  • Company: Pays corporate tax, and profits distributed as dividends may be taxed separately.
    • Example: An IT consulting firm is structured as a private limited company. While it pays corporate tax, its owners benefit from lower tax rates on dividends compared to individual income tax.
  • Partnership: Profits are taxed at the individual level, often leading to lower overall tax liability.
    • Example: A local bakery run by two partners is taxed based on individual earnings, avoiding corporate tax obligations and reducing overall tax liability.

4. Compliance & Legal Requirements

  • Company: Requires mandatory registration, regular filings, audits, and compliance with corporate laws.
    • Example: A group of engineers launches a renewable energy startup. Since they have multiple stakeholders and need regulatory approvals, they register as a company, ensuring compliance with industry standards.
  • Partnership: Has minimal legal requirements, making it easier and cost-effective to manage.
    • Example: A duo running a content writing agency operates as a partnership to avoid the hassle of extensive compliance, annual filings, and statutory audits.

5. Business Continuity & Stability

  • Company: Has a separate legal identity, meaning the business continues even if owners change.
    • Example: A software firm registered as a company continues operations after one founder exits by transferring shares to a new investor.
  • Partnership: Typically dissolves if a partner exits unless an agreement states otherwise.
    • Example: A law firm operating as a partnership dissolves after one partner retires, requiring a new agreement to continue operations.

In conclusion, understanding the difference between partnership and company is crucial for entrepreneurs when deciding on the most suitable business structure. While a Sole Proprietorship offers simplicity and control, a partnership firm enables collaboration and shared responsibility. On the other hand, a company, particularly a private limited company, provides limited liability and greater scalability. Consider factors such as liability, management, compliance, and growth prospects when choosing between a partnership vs company. Seek professional advice to make an informed decision aligned with your business objectives and risk appetite.

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Is a partnership different from a company?

Yes, a partnership firm and a company are different. A partnership firm is an unincorporated association of individuals, while a company is an incorporated entity with a separate legal identity from its members.

What is the difference between partnership and share company?

A partnership firm is owned and managed by partners who have unlimited liability, while a share company, also known as a joint-stock company, is owned by shareholders who have limited liability. The management of a share company is vested in a Board of Directors.

What is the difference between limited company and partnership?

The primary difference between a limited company and a partnership firm lies in the liability of its members. In a limited company, the liability of shareholders is limited to their share capital, whereas, in a partnership firm, the liability of partners is unlimited.

H3 What are the three major differences between a partnership and a corporation?

  1. Liability: Partners have unlimited liability, while shareholders in a corporation have limited liability.
  2. Management: Partners manage a partnership firm, while a Board of Directors manages a corporation.
  3. Transferability of ownership: Ownership in a partnership firm is not easily transferable, while shares in a corporation are freely transferable.

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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