Incorporation offers certain advantages to a company as compared with all other kinds of business organizations.
- INDEPENDENT CORPORATE EXISTENCE: The main characteristic of a company is its independent corporate existence from its management and members. A company is an independent legal person.
- LIMITED LIABILITY: The company, being a separate legal entity, leading its own business life, the members are not liable for its debts. The liability of members is limited by shares; each member is bound to pay the nominal value of shares held by them and his liability ends there.
- PERPETUAL SUCCESSION: Company’s existence does depend upon existence of its members and hence enjoys a perpetual succession.
- ADVANTAGE OF ASSETS: The company is capable of holding and enjoying assets in its own name. No members, not even all the members, can claim ownership of any of the company's assets.
- CORPORATE TAX ADVANTAGE: As the companies are taxed separately from their owners, and the corporate tax rate is generally lower than the individual tax rate, incorporation may offer some fiscal advantages.
- GREATER ACCESS TO CAPITAL: It is often easier for companies to raise money than it is for other forms of business. Companies may be able to borrow money at lower rates than those paid by other types of businesses, simply because financial institutions tend to see loans to companies as less risky than those given to other forms of enterprise.
- BRAND BUILDING: Branding consists of the name, symbol, term, sign, design or any combination of these that identify the goods and services of the company. It differentiates the Company form of organization from others. Branding is the visual voice of the company.
Types of Company Registration in India are:
An individual can set up as a sole trader, as a Partnership, Private Limited or Limited Liability Partnership etc. Each format has its advantages and disadvantages. There are multiple types of company registration mentioned below:-
- Private Limited Company (Most Common)
- Limited Liability Partnership
- Partnership
- One person Company (Recently Introduced)
- Public Limited Company
- Nidhi Company
- NBFC Company
- Finance Company
All these above-mentioned companies are different from each other. They have different types of formations, rules and regulations. So, it is very crucial to understand every detail like their documents, forms, etc. Focusing on the procedure of Online Company Registration, other company's process can also be understood as they all have the same process.
But the most widely use and in common is Private Limited Company Registration Online. Whenever the new company registration process proceeds, it's highly recommended to the applicant to choose "Private Limited Company". The reason being, it has more tax benefits than others.
Steps of Company Registration process in India
These 5 easy steps of a Private Limited company registration online:
Step 1 - Deciding your Company Structure
This is one of the most basic yet important step for Online Company Registration in India. Deciding the company structure will determine the path your company takes and how it manages operations for its whole lifetime. Thus, it becomes a crucial step to decide the right company structure according to your firm’s requirements and needs. There are many kinds of Business Structures in India, and it can be hard to choose which one to go for. Hence, we'll take a brief look at all the company structures.
Private Limited Company
The Private Limited Company Registration is the most renown business entities in India. In PVT LTD Company Registration every shareholder is liable for his share of the total capital. The Partners in PVT LTD Company needs to maintain their Board meetings, Financial Transaction Records and Annual Reports.
There is also further bifurcation in Private Limited Company Registration-
Company Limited by Shares - Members of the company are liable to subscribe their asset limited to the amount. If there are any unpaid shares then it is called as "a company limited by shares".
Company Limited by Guarantee - In this kind of PVT LTD Company registration, the liability of the members is bounded by the memorandum to an amount. Company members of the private limited company registration are individually managed as per the memorandum. This type of company registration may or may not have a share capital.
Unlimited Company - Unlimited Company Registration is known by not having any extent on the liability of its members.
- It usually requires only 2 members to incorporate a Pvt ltd company registration online.
- Getting investment is much easier in this kind of company.
- A foreign participation whether in the form of director or shareholder is also allowed in Private Limited Company Registration.
- Mandatory legal compliances are Business and Tax Returns, ROC Compliances have to be filed and Statutory Audit must be done.
One Person Company (OPC)
The concept of One Person Company Registration is new in India. It is known to be an eminent form of company registration in India. If you are a resident of India then you are eligible to incorporate a One Person Company registration.
- It requires only one member for company incorporation.
- It is best for the people who have wants of restricting their liabilities.
- If you are running a sole proprietor firm and want to expand it, OPC is right choice for you.
- The mandatory legal compliance is Business Returns. ROC compliance is limited.
Limited Liability Partnership (LLP)
Having minimum two partners, there is no limitation on the maximum number of partners in LLP Company Registration. Even the foreign LLPs can attain partnership in LLP Firm in India.
- It requires 2 members to incorporate the LLP.
- The startups or business having low investments can go for this one.
- It requires less compliance burden.
- It provides almost equal benefit as Private Limited Company.
- The mandatory legal compliance is Tax Returns like GST Return and ROC returns to be filed.
Public Limited Company
In Public Limited Company Registration, presence of at least 7 Shareholders are required along with 3 directors. There is no restriction of shares in a public limited company. If you are willing to commence a public limited company registration then you have to get a certificate from the ROC (Registrar of Companies).
- It requires 7 members for incorporation.
- They are highly suggested for the people who are high-business risk takers and have high turnovers.
- There is no bar on company to make shareholders of company.
- This is suitable for those businesses who want to operate their business at higher level.
- The mandatory legal compliance is the Business tax returns and important statutory audits to be performed.
Nidhi Company/Mutual Benefits Company
If you are planning your Fintech Business without investing big amount and RBI involvement, Nidhi Registration is best.
- Nidhi can accept and lend money to its members.
- RD, FD, Saving Account opening options are there for members.
- No RBI involvement, less investment required.
NBFC Company
It is called Non-Banking Financial Company
If you are planning to operate your Finance work at good level, NBFC is good option for you.
However, RBI's involvement lies there.
Hence, except these, there are other structures of companies that are Partnership Firm & Sole Proprietorship Firm.
Partnership Firm
As per the Partnership Act 1932 - Section 4, Partnership company registration is known as a legal relationship between the persons agreed to the share. Either all member or any individual one, can handle the profit for everyone.
- It requires minimum of 2 members for incorporation.
- The liability of the partners of a partnership firm is unlimited.
- A partnership is not a separate legal entity. The partners, collectively known as "Firm".
- A partnership may engage itself in any lawful business which the partners like.
- The mandatory legal compliance is the Income tax returns and are supposed to comply with TDS, GST, ESI regulations.
Things to Judge for deciding the business structure:
- Number of Owners/Partners
- Initial Investments in the business
- Liability
- Income Tax Rates.
- Attracting Investors
Having an unregistered company structure can be a hindering barrier to succeed. Especially when you’re looking to bring an investor to establish some capital for the business. Legally authorized business structures like OPC, PLC, Public Company, LLP, etc are much more likely to get the majority faith from an investor/investor firm. So, before, you ask yourself how to register a company? Go ahead and make an informed choice about the business structure you’re going to incorporate.
What if I want to Startup Registration or Company Incorporation?
You can call your Online Company Registration as Startup registration. Startup Registration is nothing but a business registration type. Whether you can register a private limited company, Limited Liability Partnership, OPC, Partnership firm, or Proprietorship Firm etc, each one of these shall be considered as startup registration.
Documents required for Company Registration Process
- Copy of PAN Card of directors
- Copy of Aadhaar Card of directors
- Electricity bill of office
- NOC or rental agreement of office or ownership proof
- Photograph of directors
- Email id and contact number of directors)
- Other information as required
Step 2: Getting a DSC & DIN
In company registration, there are the various documents to further process with the online company registration. Digital Signature Certificate or DSC is the digital equivalent of the real certificates. It is primarily used to confirm the identity of a person or sometimes to obtain information and receive services on the internet or to sign some documents digitally.
How to get DSC Certificate?
The Ministry of Corporate Affairs (MCA) has guided DSC Certifying Authorities (CAs) from where you can receive a DSC Check out. Our Chheda & Associates has the certified Authority for getting DSC Certifications. We have a regular processing method that takes less than 4 working days with remarkably budget-friendly pricing.
Different Classes of Digital Signature Certificates (DSC)
- Certificate: Individuals/Private Subscribers.
- Certificate: Business Personnel both for personal and private use.
- Certificate: Big Assurance Certificates.
Majorly for E-commerce Operators whether individuals or organizations DIN is Director Identification Number. Its a unique identification number provide by the Central Government to individuals aiming to be the directors of a new or already existing company.
DIN Forms :
- SPICe+ Forms: The SPICe+ forms are utilized for the allocation of the DIN number to the intended directors of a new company in the process of the company registration.
- DIR-3 Form: a DIR-3 form is a form for becoming a director of an already existing company.
- DIR-6 Form: To send the changes in any details of the existing directors
- Especially for new company registration DIN & DSC is important.
Step 3: File for Name Approval
At the time of Company Incorporation, one must have to select a name with the suffix. When someone is picking up a name for their company. Lets say for, Pvt ltd company registration online, they must have to add suffix "Pvt Ltd" with the name of the comapny. There are two e-forms that can be used to file for Name Approval.
RUN (Reserve Unique Number)
SPICe (Simplified Performa for Incorporating Company Digitally)
However, before filing for name approval, one must check that company's suggested name is not conflicting with an already existing company's name.
How Chheda & Associates helps in checking the name availability?
Chheda & Associates have a software where one can check the name availability for New Company. This is the most crucial step to follow. This helps to cease the unneccesary legal problems that might occur. Since most of the time Comapnies do have trademark on their Company's name. Use our free tool to make a organic Company name and avoid any clashes.
Step 4: File AOA and MOA & Submit other documents for Incorporation
MOA is for the Memorandum of Association and AOA is for Articles of association. Collectively, these two forms the nature of the company. These two essentially define the scope of the legal powers exercised by the company. Also, the information about the company activities along with the relationship of the company with the shareholders. The MCA has offered the e-forms INC-33 for e-MOA and INC-34 e-AOA to help for Company Incorporation. Compile other documents and submit them.
- Copy of PAN Card of directors
- Passport size photograph of directors
- Copy of Rent agreement (If rented property)
- Electricity/ Water bill (Business Place)
- Copy of Property papers (If owned property)
- Landlord NOC (Format will be provided)
Make sure you submit all the mention documents to our expert team for no troubles in future processing.
Step 5: File for Incorporation
The last step in the company incorporation system is filing for incorporation and the MCA has given dedicated frameworks for the incorporation of companies. SPICe+
Form, for the incorporation processing of Limited Companies (Public /Private/ LLP/OPC). Wait for 10-12 days for the certification of Incorporation. After you get the Incorporation Certificate, concerned departments will provide you PAN, TAN and other certificates as committed at the time of application filing.
How Chheda & Associates helps in Company Registration?
We at Chheda & Associates helping budding the entrepreneurs by providing free consultancy over New Company Registration or Firm Registration or Start-up Registration. So that they become capable to contribute ecosystem. Chheda & Associates is providing Company Registration by professional team with guaranteed best service.
For better assistance and service over all factors of company registration do connect to our professionals on info@chheda.net.in
Disclaimer:- The materials provided herein are solely for information purposes and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. The material s written on the basis of the provision applicable as on date of writing of this article.