The choice of the appropriate company structure for your firm is just as crucial as any other business-related decision. Your company can run effectively and achieve your necessary business goals with the help of the proper business structure. Every company in India is required to register in order to comply with the law. Let’s attempt to comprehend the various business formats in India before learning how to register a corporation.
Starting a business is an extremely exciting time for a startup, and incomplete paperwork may cause unneeded confusion and delay in the company’s registration. Our attention is on the prerequisites for setting up a business, or more specifically, on the preparations required to incorporate under the 2013 Companies Act. The legal procedure of registering a company is completed with the issuance of the certificate of incorporation. We’ll go over all the steps you need to take to get your new business the certificate of incorporation.
You might be debating whether or not you require a professional service provider in order to form a private limited corporation. Without a doubt, the answer is yes. You require the assistance of qualified service providers like GroomTax. We assist the early-stage entrepreneurs with company registration before assisting them with managing tax and regulatory compliances. As previously said, the examination of the requirements to register the company is the first step in preparing to register a company in India.
Here Are The Requirements For Company Registration
- Company’s total number of shareholders
- Directors in Number (Composition of Board of Directors)
- An Indian Resident Director is required.
- Reliable and appropriate Name (Name Approval Guidelines)
- Address of the Registered Office and Owner’s NOC
- Capital Requirement (Authorized Capital Vs Paid-up Capital)
- Documentation for registering a business.
What Kinds Of Company Structures Exist In India?
Let’s attempt to comprehend the many business formats that are available in India. Listed below are a few of them:
One-Person Company (OPC)
An OPC, which was just recently launched in the year 2013, is the easiest approach to launch a business if there is only one promoter or owner. It permits a lone owner to continue working while remaining associated with the corporate structure.
Limited Liability Partnership (LLP)
An LLP is a distinct legal entity where the partners’ obligations are constrained to the amount of their agreed-upon contribution. The Limited Liability Act of 2008 requires the Registrar of Companies to create an LLP (ROC).
Private Limited Company (PLC)
A PLC is recognised by the law as a distinct legal entity from its founders. Directors and stockholders (stakeholders) are present (company officers). Every person is viewed as a member of the workforce.
Public Limited Company
A Public Limited Company is an unpaid membership organisation that has been legally established. It has a distinct legal existence, and each member’s liability is only for the shares they own.
You can select the business structure that best meets your needs and register your company using that structure.
Other types of company models include partnerships, sole proprietorships, and Hindu undivided families. Please remember that these structures are not covered by company law.
Why is it important to choose the right business structure?
Your income tax returns will rely on the business structure you choose, so be sure to do your research. When registering your business, keep in mind that there are many degrees of compliances that must be completed depending on the business structure. A sole proprietor, for instance, is simply required to file an income tax return. However, a business must submit annual reports to the Registrar of Companies along with an income tax return.
The annual audit of a company’s books of accounts is required. Spending money on auditors, accountants, and tax filing professionals is necessary to comply with these legal requirements. Therefore, while considering company registration, it is crucial to choose the appropriate corporate structure. An entrepreneur needs to know exactly what kind of legal compliances they are willing to handle.
Investors will always favour a recognised and lawful business structure, even though some business models are more favourable to investors than others. An investor might be reluctant to give money to a lone proprietor as an example. On the other side, investors will feel more at ease making an investment if a solid company idea is supported by a recognised legal structure (such LLP, Company, etc.)
How should a business structure be chosen when registering a company in India?
Before choosing a business structure, every entrepreneur must ask himself or herself a number of crucial issues.
* How many owners or partners will there be in your company?
A one-person company would be the best option for you if you are the sole owner of the startup capital needed for the business. On the other hand, a Limited Liability Partnership (LLP) or Private Limited Company would be suitable for you if your company has two or more owners and is actively looking for investment from other parties.
* Should your choice of business structure be based on your initial investment?
A sole proprietorship, HUF, or partnership business might be a great choice if you wish to start off with less money. However, you can select a One Person Company, LLP, or Private Limited Company if you are confident that you will be able to recoup the startup and compliance fees.
* Willingness to assume all of the business’s obligation
Business entities with unlimited liability include sole proprietorships, HUFs, and partnership firms. This means, in case of any default in loans, the entire money will be recovered from the members or partners in profit sharing ratio. In these situations, there is a substantial risk to personal property.
Companies and LLPs, however, have a limited liability provision. This indicates that each member’s responsibility is limited to the amount of their contribution or the value of the shares they own.
* Rates of Income Tax That Apply to Businesses
The standard slab rates for income tax apply to sole proprietorships and HUFs. In a sole proprietorship, the business’s revenue is combined with the owner’s other earnings. However, a tax rate of 30% is applicable to other entities, such as partnership firms and corporations.
To learn more about Income Tax Slab Rates: Income Tax Slab Rate List
* Plans to raise capital from investors
As was previously indicated, when your business structure is unregistered, it is challenging to attract investors. When it comes to investments, organisations like LLPs and Private Limited Companies are trusted. Make sure you select the appropriate structure, and ask a professional for assistance so that you can register under the correct direction.
What are the required Documents for Company Registration?
The following general documents must be supplied in order to register an LLP, One Person Company, Private Limited, or Public Limited Company:
Documents from the company’s directors and shareholders/LLP partners:
* Identification documentation for each director and shareholder of the company (partners in case of LLP). You may provide any of the following documents as identification proof:
-Pan Card
-Aadhar Card
-Driving License
-Passport
* Address verification for each director and shareholder (partners in case of LLP). Any of the following papers may be used as address verification:
-Recent phone bill (not older than 2 months)
-Most recent electric bill (not older than 2 months)
-Address on bank account statement
-DSC and DIN for each director (or DPIN for LLP directors) (partners in case of LLP)
Documents of the LLP or Company
* Proof of the company’s registered office. The following paperwork must be provided as proof of the company’s address:
-Agreement for a lease or rent between a company or LLP and the landlord
-A letter or notice of consent (NOC) from the landlord granting authorization to use the space as the registered office of the LLP or corporation.
-Sale agreement for the company’s or LLP’s office space in their names
-The Memorandum of Association (MoA), which outlines the purposes for which the business will be incorporated as well as the members’ legal obligations.
-The company’s operating rules are set down in the articles of association (AoA).
How Does GroomTax Aid in the Process of Simplifying Company Registration?
You may easily establish your business using GroomTax in about 10 days (subject to departmental approvals). Our package for registering a corporation includes:
-Application of your company’s name
-Getting two directors’ DINs
-filing of the SPICe+ form
-Stamp Duty payment for authorised capital up to Rs. 1 lakh, excluding Punjab, Madhya Pradesh, and Kerala
-The issuance of the certificate of incorporation, together with the PAN and TAN
Since GroomTax’s company Registration process is entirely online, you can save time and money by avoiding a trip to our office.
