When it comes to setting up a business in India, it is important to consider the various legal entities available and choose the most suitable one for your business. The legal entity you select will have a significant impact on the success of your business, and so it’s essential to make an informed decision. 

The major factors that influence the decision of choice of legal entity in India are:

1. Taxation: The taxation system in India is complex and has various laws governing taxation. Depending on the type of business you are running, the tax rates and the deductions available will vary. It is essential to understand the tax regulations of the legal entity you are considering and how they will affect your business’s bottom line. 

2. Liability: The legal entity you select will determine the level of liability that you and your business partners have. This is an important factor to consider, as it will affect the amount of risk you are taking on as you start and grow your business. 

3. Compliance: Certain legal entities require more compliance than others. It is important to understand the compliance requirements associated with the legal entity you select and make sure that you have the necessary systems in place to meet these requirements. 

4. Funding: Depending on the type of legal entity you select, you may be able to access funding from various sources. This can be an important factor to consider when deciding on the legal entity as it can help you get the required capital to get your business off the ground. 

5. Ownership: The legal entity you select will determine the ownership structure of your business. This is important as it will determine how decision-making is handled and the extent to which you can attract outside investors. 

6. Complexity: The complexity of the business operations will also influence the type of legal entity you should opt for. If your business operations are complex, then it is best to opt for a private limited company, which provides more flexibility and ease of operations, than a sole proprietorship or partnership.

7. Time & Cost: The time and cost involved in setting up the legal entity will also determine the type you should opt for. For example, setting up an LLC or a private limited company will require more time and money than setting up a sole proprietorship or partnership.

These are the major factors to consider when deciding on the legal entity in which to carry on your business in India. Making an informed decision is essential, as it will have a significant impact on the success of your business. Before selecting a legal entity, it is important to research the various options available and understand the implications of each.