If you are contemplating starting a not for profit business, one of the options available is registering a Society under Societies Registration Act 1860.
This is a Central Act, but registrations are jurisdictional, depending on the location of the office.
Registration is simple and so is dissolving the society. There are a few compliances and very little monitoring from the Registrar.
A Society can be formed for the following purposes:
Charitable societies, the military orphan funds or societies established at the several presidencies of India, societies established for the promotion of science, literature, or the fine arts for instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading-rooms for general use among the members or open to the public or public museums and galleries of paintings and other works of art, collections of natural history, mechanical and philosophical inventions, instruments, or designs.
Any seven or more people subscribing to the Memorandum and filing the same with the Registrar along with a fee. Usually the process takes about 15 days. The Registrar would provide a Registration Certificate.
The Memorandum contains: Name of the Society, Objects for which the Society is being registered, the rules and regulations of the Society, Governing Council Members.
Separate legal entity. Society can sue and be sued in its own name. A registered Society can hold property (moveable or immoveable), if not vested in the trustees, shall be deemed to be vested with the governing council.
Annual General Meeting shall be held annually. Accounts shall be presented to the Members and approved. The same along with the list of governing / management committee members shall be filed with the Registrar.
Dissolution / Winding up.
Any number not less than three-fifths of the members of any society may determine that it shall be dissolved. Property and liabilities gets disposed / settled. Intimation shall be filed with the Registrar.
There are other legal avatars for starting a not for profit business, i.e. Trust or a Section 25 company under the Companies Act. Hope to write about them sometime.
Disclaimer : This is not a legal opinion and should not be construed as one. Please speak with your attorney for any advice.