In this article, we have provided the step-by-step procedure and process to Register a Private Company in India. In India, every business must Register itself as Legal Compliance. The purpose of this article is to share knowledge for newbies in the business industry, and those who want to start their own private company, but have no idea or lack resources on how to Register a Private Company in India.
We all know that starting a new business means starting from zero. From gaining capital, and knowledge, to gain expert advice, all these factors are very crucial tasks. But managing the financial process and the legal task like the Registration of a company is quite a tedious task in almost any corner of the globe.
Let us see the different types of business structures that are available in India before we dive into the Registration process.
Types of Business Structures in India
Let us study the type of business structure available in India.
1) One Person Company
If you are the sole owner looking to limit their liability, One Person Company (OPC) is the best way to start a company. It was introduced in the year 2013. The tax advantage in OPC is that you get a tax holiday for the first 3 years under the Startup India Higher Benefits on Depreciation. It allows the sole owner of the company to carry on their work and still be a part of corporate firms.
2) Limited Liability Partnership (LLP Company)
LLP is a Limited Liability Partnership Act established under the limited liability Act 2008 with ROC. It is ideal for service-oriented businesses that have low investment needs. It is a separate legal entity where the liabilities of partners are only limited to their agreed contribution.
3) Private Limited Company
In a private limited company, each individual is regarded as an employee of the company. In the eyes of the law, a private limited company is regarded as a separate legal entity from its founder. These types of businesses have a high turnover and get tax holidays like OPC for the first 3 years under the startup India higher benefits on Depreciation. Also, audits here are compulsory.
4) Public Limited Company
A Public limited company has a business with high turnover, where audits are mandatory. It has a voluntary association of members that is incorporated under the company law.
Now it’s up to you, what business structure you choose, according to the business type and your capital, and then according to it, register your business.
Why is it Crucial to Pick the Right Business Structure?
We all know that choosing the right company for your business is as substantial as any other business-related activity. The Right business structure will strengthen the business and support you to operate it efficiently and meet your desired business targets. Your Income tax Return also depends on it.
An entrepreneur must have a clear mindset for the kind of Compliance you are ready to deal with. For example, a sole proprietor has to file only income tax returns, but a company may have to file Income Tax returns, as well as Annual Returns with the Registrar of the company. Also, the company’s book of account has to be audited every year. Hence, it is important to select the Right business structure, when you are thinking of Company Registration in India.
The Question you must ask yourself before Choosing a Business Structure for Company Registration
Now let us look at some basic questions every Entrepreneur must ask himself when you finally choose a Business Structure.
How many Partners/owners your business will have?
To avoid any conflicts or confusion later, it is necessary to decide whether you are leading the entire company and the initial investment or whether your business will have one or more partners.
Whether your Initial Investment must determine the choice of your business structure or not?
If you want to start up the business with less initial cost, then you can opt for sole properties or HUF, or Partnership Firms. But, if you can invest better initially and are confident that you will recover the total setup and the compliance cost, then you can opt for OPC, LLC, or a Private Limited Company.
Are you willing to bear the entire liability of the business?
If you choose business structures like sole proprietors, HUF, or Partnership firms, know that they give unlimited liability, which means that in any case of default in loans, the entire money will be taken from the partners or the owners. It makes it risky, as compared to the business structure like LLP, where the risk is low, as it is a Limited Liability clause. That means in any default here, the owner or partners will only contribute the amount of contribution made by them or only the number of shares each member holds.
Have you made plans to get money invested in the company from Investors?
When your company is unregistered, it senses difficulty to get investment for your business from Investors due to trust-related factors. Therefore, you must make sure to seek expert advice and guidance for the Investments in the Company, and also get the business registered.
How To Register a Private Company in India?
To Register, a Private limited company in India follow the 5 simple steps as follows-
Step 1- Digital Signature Certificate (DSC)
Digital signatures are the initial step required to file the forms on the MCA portal. We all know that the company registration process is completely digital. Hence it is compulsory to obtain the DSC from a government-recognized certified authority. Digital Signature Certificate is compulsory for all the proposed directors and the subscribers of Articles of Association (AoA) and Memorandum of Association (MoA).
Step 2- Director Identification Number (DIN)
DIN is the Director Identification Number that is an identification for a director of the company. The DIN is to be obtained by the director of the company. During the registration process, the DIN of all the directors along with their names and address proof has to be provided. The DIN can be generated by filling out the SPICe+ form, which is a web-based company registry form.
Step 3- Registration on the MCA Portal
The SPICe+ form has to be filled and submitted on the MCA portal for Private company registration in India. To fill out the form, first of all, the 3 directors(max) can register on one SPICe+ form, to register on the MCA portal.
Step 4- Reservation of the company name
The Reservation of the company name is a crucial step because if any similar name or same-name company already exists, then the SPICe+ form may get rejected. If the
SPICe+ form gets rejected due to any reason; the owner will have to refill another SPICe+ form for reservation of the company by paying the prescribed amount. However, if the name gets approved in part, then within 20 days, the company must fill out form B of the SPICe+ form and submit it online.
Step 5- Certificate of Incorporation
After the company has filled out the completed SPICe+ form along with the required documents the Registrar of the company will examine the application. If the company is verified, then the Registrar will issue the Certificate of Incorporation.
Document Requirements for the Company Registration
Here, we have provided the complete details regarding the documents you will need to submit for the registration of LLP, OPC, PLC, and the Public Limited Company in India.
- Documents of the Director and Partners of the shareholders of the LLP.
- Proof of Identity of all the company directors and shareholders like PAN card, Aadhar card, Driving license, and Passport.
- Address Proof of all the directors and the shareholders like the latest electricity bills, telephone bills, and bank account statements having the address.
Documents of the Company/LLP
- Proof of Registered office of the company like Tenancy/Rental Agreement between landlord and company, letter of NOC from the landlord, and Sale deed of the company.
- The MoA contains the objects of the company, why it is incorporated, and the liability of the members of the company.
- The AoA contains the objects of the company, why it is incorporated, and the liability of the members of the company.
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