Process and Steps to Register a Company in India

Register a company in India can be done through Simplified Performa for Incorporating Company by electronic means (SPICe -INC-32), with eMoA (INC-33), eAOA (INC-34), is the default choice and most businesses are required to be registered through SPICe only. Any foreign company can establish its place of business in India by filing eForm FC-1 (Information to be filed by a foreign company)

What are the various kinds of companies in India?

Let’s try and know the types of business structures are available in India. Here is a list of certain types of them:

1. One Person Company (OPC): This type of company is newly introduced in the year 2013, One Person Company is the finest way to set up a company if there happens only one promoter or owner. It allows a sole-proprietor to carry on his work and still be part of the commercial framework.
2. Limited Liability Partnership (LLP): Limited Liability Partnership is a distinct legal entity, the liabilities of partners are only limited only to their fixed share. So, clearly what one invests shall be liable for the same.
3. Private Limited Company (PLC): Private Limited Company is a company in the eyes of the law which is regarded as a separate legal entity from its founders. It has shareholders (stakeholders) and directors (company officers). Each individual is regarded as an employee of the company.
4. Public Limited Company (PLC): Public Limited Company is a voluntary association of associates which is registered under company law. It has a separate legal presence and the liability of its members are limited to shares they hold or invested. Other forms of companies which can be registered are Sole proprietorship, Hindu Undivided Family, and Partnership firms. Though, these types of companies do not come under the domain of company law.

Why is it significant to choose the right Company structure?

While deciding the type of company keep in mind that it will affect your Income Tax Returns. While registering your company, remember that each company has different stages of compliances that need to be met with. For instance, a sole proprietor has to file only an income tax return. However, a company has to file an income tax return as well as annual returns with the ROC. A company’s books of accounts are to be regularly audited every year. Enduring by these legal compliances needs spending money on auditors, accountants and tax filing experts.

Therefore, it is significant to choose the right business structure when thinking of company registration. An entrepreneur must have a clear idea of the kind of legal compliances he/she is willing to deal with. While some companies are comparatively investor-friendly than others, investors will always favor a recognized and legal company structure. For instance, an investor may hesitate to give money to a sole proprietor. If a good business idea is backed by acknowledged legal structure, the investors will be more contented investing.

How to select a company structure while applying for company registration in India?

Let’s take a look at some significant questions every businessperson must ask himself before he/she finally choose upon a company’s structure.

• How many owners/partners will your business have?

If you are a single person who possesses the complete initial investment mandatory for the business, a One Person Company would be ideal for you. If your company has two or more owners and is actively seeking investment from other parties a Limited Liability Partnership (LLP) or Private Limited Company would suit you finest.

• Should your initial investment determine your choice of company structure?

If you want to spend a smaller amount initially, it would be prudent to go in for a Sole Proprietor, or a HUF or a Partnership. But, if you are certain that you will be able to recover the setup and compliance costs, you can opt for a One Person Company, LLP or a Private Limited Company.

• Readiness to bear the complete liability of the business: Company structures like a sole proprietor, HUF, and partnership firm have unlimited liability. This means, in case of any evasion in loans, the entire money will be recovered from the members or partners in profit sharing ratio.
• Income Tax Rates Applicable to companies: The income tax rates appropriate to a sole proprietorship and a HUF are the usual slab rates. In case of a sole proprietorship, the company income is clubbed with the individual’s other income but in the case of other companies like partnership and company, a tax rate of 30% is applicable.
• Plans for getting money from shareholders: It is hard to get investments when your company structure is not registered. Entities like LLP and Private Limited Company are trusted when it comes to investing your money.

How to Register a Company in India?

Registering a company in India is now a simple and short 4-step procedure. Here is what you’ll need to obtain:

1. Digital Signature Certificate (DSC)
2. Director Identification Number (DIN)

• New user registration or Registration on the MCA Portal

1. Certificate of Incorporation

If you still need help registering your company, don’t stress over it, Contact ASC and let our team of experts guide you. All the basics of how to register a company can be guided by us and will help you set up your business in India.