How to Register a company / startup
India has always been a land of opportunity for businesses to thrive with a wide potential consumer base of over 1.35 billion as of 2018. There are about 11,89,826 active companies operating in India as of June 2018. India also has been getting rid of archaic and out-of-date laws and enabling ease of doing business with One-Day company Incorporation and easy Company incorporation procedure. It can always be a profitable idea to start a company in India if you do your marketing homework well. However, before you can get started with any business activities, you have to incorporate your business legally to avoid any operational hiccups. Let’s look at how to register a company in India, the steps, the documents and everything in-between.
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This is one of the most fundamental and foundational steps for registration of a company anywhere around the world. Deciding the business structure of your company will basically define the path your company takes and how it handles operations for its entire lifetime. Thus, it becomes a pivotal step to decide the right business structure conforming to your firm’s needs and wants. There are many types of Business Structures in India, and it can be hard to decide which one to go for. Therefore, we’ll take a brief look at all the business structures in order to help you choose the best one. how to register a company
| Company Types | Minimum Shareholders | Suitable for | Tax Advantages | Legal Compliance |
|---|---|---|---|---|
| Limited Liability Partnerships | 2 | Businesses with low investment needs and Businesses offering Services | Depreciation Benefits | Tax Returns like GST Return and ROC returns to be filed |
| One Person Company | 1 | Solo owners with the intention of restricting their liabilities | Startup India Higher benefits on benefits allow for tax holiday in the first 3 years of operation. No tax on dividend distribution | Business Returns. ROC Compliances are limited |
| Private Limited Company | 2 | High turnover businesses | Tax holiday in the first years of operation in accordance with Startup India higher benefits | Business and Tax Returns, ROC Compliances have to be filed and Statutory Audit is mandatory |
| Public Limited Company | 2 | High-risk, high-reward based high turnover businesses | Lower and Reduced tax advantages as compared to others | Business tax returns to be filed. Mandatory statutory audits to be performed |
There are other forms of Business Structures in India which operate outside the jurisdiction of the companies law and hence their registration is not mandatory. However, to ease operations and day-to-day functions it is always recommended to get these registered as well. The business structures are:
It can’t be stressed enough how important it is to choose the correct business structure to suit your businesses needs. In a way, choosing the right business structure for your business is one of the factors for its success. It is pivotal to choose the correct business structure because the Income Tax Returns, as well as, the legal compliances for the business depend on its structure.
For eg. Sole Proprietors only have to File their GST returns and their income tax returns in stark contrast to this, a private company has to file GST returns, Income Tax Returns, have to get their audits done along with various other legal compliances. Conforming to these compliances requires a business owner to invest their money to hire auditors, accountants, tax-filing experts and invest company’s time and resources into carrying out these legal compliances. Thus, before even getting started with a certain type of business structure it is advisable to acquaint yourself with the compliances you will be dealing with for a particular business structure and which compliances are you actually willing to comply to and make an informed decision to make.
Contrary to this, although the companies might have more compliances, having a proper and recognized legal structure behind your business makes it appear more investment-friendly. An investor is less likely to invest in a sole trader or a sole proprietor and would much rather invest in a business idea backed by a proper legal structure(Private Company, Public company, LLP etc).
Things to Consider for deciding the business structure
These are some of the main points every aspiring entrepreneur should think about while they’re thinking about what type of company/business they want to run.
SO before, you ask yourself how to a register a company? Go ahead and take an informed decision about the business structure you’re going to incorporate.
What is a Digital Signature Certificate? you may ask. To explain that we will first address what is a Digital signature. A Digital Signature is a means to verify the authenticity of a software our in our case, a document. Most of the times, the Digital Signature is a copy of the physical signature however, it could also be a stamped seal which verifies the authenticity of the document and offers far more inherent security against impersonation. how to register a company
So what is a Digital Signature Certificate? Digital Signature Certificate or DSC for short is basically the digital equivalent of the physical certificates. It is basically used to verify the identity of a person or sometimes to access information and get services on the internet or to sign certain documents digitally. how to register a company
So how do you obtain a Digital Signature Certificate? The Ministry of Corporate Affairs (MCA) has prescribed DSC Certifying Authorities (CAs) from whom you can obtain a DSC Check out the Certifying Authorities at (http://www.cca.gov.in/cca/?q=licensed_ca.html) which will take 3-7 business days.
As an alternative, you can consider going for DSC registration online via LegalRaasta’s smooth processing system which takes less than 3 business days with extremely budget-friendly pricing.
Different Classes of Digital Signature Certificates (DSC)
Class 1 Certificate: Individuals/Private Subscribers.
Class2 Certificate: Business Personnel as well as for personal and private use.
Class 3 Certificate: High Assurance Certificates. Majorly for E-commerce Operators whether individuals or organizations
When you have a plan to incorporate a company, you certainly have to have a name for it right? And it is pivotal that the name approval procedure of the company goes smoothly and without objections or it could stall all your progress of registering a company. To file for name approval for Public Companies, PLCs (Public Limited Company), OPC, NBFC etc use the RUN(Reserve Unique Name) e-form Alternatively, to file for name approval, business owners can utilize the SPICe forms. SPICe stands for Simplified Performa for Incorporating Company Digitally.how to register a company
In order to incorporate an LLP however, filing for name approval has to be done via the RUN-LLP forms.
However, before you even file for approval it is vital that you check that your company’s proposed name is not clashing with an already existing company name. You have to do this in order to prevent legal troubles since many times companies have performed trademark filing procedure on their company name. Use our free tool to perform a Company Name Search and avoid any clashes.
DIN stands for Director Identification Number and it is a unique identification number given by the Central Government to individuals intending to be the directors of a new or already existing company.
DIN Forms
SPICe Forms: The SPICe forms are used for allocation of the DIN number to the proposed directors of a new company in the process of the company registration.
DIR-3 Form: DIR-3 form is a form for becoming a director of an already existing company. File DIR-3 Online
DIR-6 Form: To convey the changes in any particulars of the existing directors
The Final step in the company incorporation procedure is filing for incorporation and the MCA has given dedicated forms for incorporation of companies.
SPICe Forms (INC-32) The SPICe forms allow for the incorporation processing of Limited Companies (Public /Private/ LLP/OPC) and have the following procedures streamlined.
For Incorporating an LLP, governed by the LLP Act, 2008, the Ministry of Corporate Affairs has introduced FiLLiP e-form to ease the company registration procedure.how to register a company
MoA stands for Memorandum of Association and AoA stands for Articles of association. Together, these two form the constitution of the company. These two basically define the extent of the legal powers wielded by the company and the information about the business activities of the company along with the relationship of the company with the shareholders.
Read More about: Articles of Association and Memorandum of Association.
After you have filed for company registration, you have to file the constitution of the company. The MCA has provided the e-forms INC-33 for e-MoA and INC-34 e-AoA to help incorporate the company.
In total, therefore to incorporate a company in Indiait would roughly take 7-8 business days. In addition to this, you have to follow Companies Post Incorporation Compliances.
Therefore, these are the comprehensive step by step procedure for registering a company. With this guide, we hope to have answered all questions related to how to register a company that you might have. We wish you all the best in your endeavors.
Get your company Registered easily and in the quickest time with the CA/CS expert team of LegalRaasta, where we strive to simplify the legal journey. Call +91-8750008585 to get started!