Do you wish to incorporate a business in India? We are confident that this article will provide all the information you need if you are considering starting a business and are looking for details on the processes involving registration.
In this post, we will lead you through the many stages incorporated in registering a business, as well as the numerous kinds of companies you can set up in India. As you are already familiar with it, some businesses are a state subject while some are regulated on a nationwide level. For instance, if you opt for starting a gambling business in India, the only two exceptions to this rule are Goa and Sikkim, which have legalized sports betting and gambling under the control of the governments of their respective states. Daman joined these two states to make online gambling legal within its borders, which some Indian casinos from the list here took advantage of and became lawful in their operations.
Let us get started on the steps and explanations of how to register a company in India without further ado…
Types of Formation for India Company Registration
The kinds of structures that are permitted must be understood before creating a corporation in India. There are numerous sorts of corporate bodies that are currently visible, but because most people here opt for small firms, we will primarily focus on the following formation types.
The following are the top five company formations for small firms in India:
- Sole proprietorship
- General partnership
- OPC (one-person company)
- LLP (Limited Liability Partnership)
- PLC (Private Limited Company)
Now let us talk a little bit about the different kinds of organizations and who should choose them.
In a sole proprietorship business structure, you, the owner, manage every aspect of the organization by yourself. You will be accountable for the entire organization’s gain or loss. Given that it is not subject to company rules, India is where this formation is most common, especially among newcomers.
Choose this particular proprietorship formation if you are beginning something new with very little capital outlay and are not looking for any perks.
A partnership is defined by company law as a relationship between people who consented to divide the profits from any firm that all of them, or any one of them, serve as agents for (we paraphrased). The Indian Partnership Act of 1932 governs partnership firms. A partnership firm must have no fewer than two partners.
Additionally, a partnership organization is simple to set up and involves less compliance if you are beginning a new business with minimum capital outlay.
One-Person Company (OPC)
New business owners in India have the option of choosing the recently introduced one-person corporation (OPC). The 2013 Companies Act served as the propellant for its introduction. By enabling people to establish a single-person economic unit, this business entity supports entrepreneurs who are capable of launching an enterprise on their own. However, it is required to switch from an OPC to a PLC (Private Limited Company) if your company’s annual revenue exceeds Rs. 2 Cr.
This kind of company creation is for people who want to launch their own businesses while taking advantage of certain corporate privileges.
Limited Liability Partnership (LLP)
In India, Limited Liability Companies (LLPs) are growing in popularity. The Limited Liability Partnership Act of 2008 governs it. Any one member of the organization will be required to accept limitless liability under this structure, whereas other members will only have limited liability based on the size of their investment.
Above all, entrepreneurs seeking freedom who wish to run a business with limited liability and who want to take advantage of certain corporate benefits can choose this formation.
Private Limited Company (PLC)
The most common sort of business is a Private Limited Company (PLC). Business owners gain a lot from these legal endeavors. The registration procedure for PLCs is governed by the Ministry of Corporate Affairs (MCA) Companies Act of 2013 and the Companies Incorporation Rules of 2014.
However, to establish a PLC, you need to have a minimum of two and a maximum of 50 directors. This method of company formation is preferred by small and medium-sized businesses in India due to the advantages of obtaining stock, limited liability protection for shareholders, and special legal entity status.
How to Register a Company in India: 5 Steps
Due to the MCA’s adoption of the INC-29 Form, it is now simpler to register a business in India.
The INC-29 form serves as a central hub for several processes, including approving the company name, obtaining a Director’s Identification Number (DIN), and submitting an application for company incorporation.
In order to form a company in India, follow these steps:
# 1 The Digital Signature Certificate (DSC) Application
Applying for a digital signature certificate is advised first. All candidates for directorships are required to submit an application for a digital signature, also known as a DSC. It also serves as an electronic signature, which is usually needed throughout the online company registration procedure.
Generally, it takes 2 to 5 days to issue a DSC, depending on the documents that are submitted. Furthermore, in order to guarantee the authenticity and security of documents filed electronically, the Information Technology Act of 2000 contains regulations for the use of digital signatures.
# 2 Making INC-29 Ready
Securing the firm name is advised before submitting the documents for DSC. When approving the firm name, the authorities are especially picky. Make sure the firm name is original and has not already been registered. Although this component has nothing to do with registering a business, we thought it was important to highlight it here because it is something that startups frequently overlook.
You need a DIN, a Memorandum of Association (MOA), Articles of Association (AOA) composed by a Company Secretary (CS) or a lawyer, verified documents of registered office, self-attested appointment letters, and a declaration authenticated by a company secretary in addition to name approval when preparing INC-29 Form.
# 3 Submitting INC-29
When every one of the paperwork is prepared, the INC-29 form should be submitted. By all means, one must exercise extreme caution while submitting online since there is only one opportunity for revision. You are required to resubmit the form if it is refused and pay the fees. You must pay the permitted capital indicated, stamp duty fees, and filing fees when submitting Form INC-29.
The form can usually be filed in one day.
# 4 Document Verification by ROC and Certification Issuance
The supplied documents will now be examined by the Registrar of Companies (ROC). Not to mention, you will obtain your certificate of incorporation in 7 to 10 working days provided the authorities are satisfied and no adjustment is necessary.
Today, MCA only offers digital certificates, which are mailed to the email address you provided on the form.
# 5 Acquire PAN/TAN
You must obtain a Permanent Account Number (PAN) and a Tax Account Number (TAN) for your firm in accordance with the Income Tax Act of 1961. You can either complete this task yourself or have a pro handle it for you directly from the National Securities Depository Limited (NSDL) website.
You can open a business bank account for your firm by submitting the required paperwork after receiving the PAN and TAN.
For the End…
These are the procedures that must be followed in order to register a corporation in India. Choose the business format that works best for you based on the size of your operation.