Setting up a private limited company is one of the highly recommended ways to start a business in India. This type of company offers limited liability for its shareholders with certain restrictions placed on the ownership. An LLP has partners, who own and manage the business. Whereas in private limited company registration, directors may be different from shareholders.
We take care of all legal formalities and fulfill the compliances, as defined by the Ministry of Corporate Affairs. Post-approval of the company registration process, you receive a Certificate of Incorporation (CoI), along with PAN and TAN. Now, you can open a current bank account and begin your business operations.
Types of Company structure
It is necessary to choose your company structure carefully as your “Income Tax Returns” will depend on it. While enrolling your enterprise, remember that every company structure has different levels of compliances that must be met. For example, a sole proprietor has to register only an income tax return. Though, a company has to register an income tax return along with annual returns with the registrar of companies.
A company’s account books are to be mandatorily audited all year. Meeting certain legal compliances require spending money on auditors, accountants and tax filing experts. Hence, it is necessary to choose the right company structure when considering company registration. An entrepreneur must have a fair idea of the kind of legal compliances he or she is ready to deal with. Types are:
- Private limited company :
A private limited company is a separate entity. The liability of the members of a “Private Limited Company” is limited to the number of shares individually owned by them and the shares of the company cannot be publicly traded.
- Section 8 Company :
Section 8 Company is listed under Section 8 of the Companies Act, 2013. It has been authorized for expanding commerce, art, science, education, research, social welfare, religion, for the protection of the environment, if there is any form of income, then it can only be used for advertising the objects of the company and no profit can be paid to it’s members. Both “Section 8 Company and Section 25 Company” are different forms of a company, which are registered under the Companies Act, 2013 for charitable or not-for-profit objectives.
- One Person Company (OPC):
OPC stands as a separate legal entity from it’s members, offers limited liability to it’s shareholders, has a flow of business and is simple to incorporate. One person company is similar to a “Private limited company” but it only needs one single person.
- Limited Liability Partnership:
In the LLP partnership, every partner holds limited liabilities. It, hence, exhibits components of partnerships and corporations. In an LLP, each partner is not accountable or responsible for another partner’s misconduct or carelessness.
- NBFC Company:
Nidhi Company is a kind of Non-Banking Financial Company (NBFC). It is determined to borrow and give money to it’s members. It implants the habit of savings among it’s members and acts on the principle of mutual profit.
Benefits
A registered company increases the authenticity of your business. It helps your business:
- Safeguard from personal liability and protects from other risks and losses
- It helps to attract more customers
- A private limited company has multiple options for fundraising. A company can raise funds from shareholders, investors, angels, venture capital funds, private equity funds, foreign funds, NBFCs, banks and other financial institutions. Only a company can raise debt and equity funds from investors.
- Offers liability protection to protect your company’s assets
- A company has ‘perpetual succession,’ which means it will continue to exist until it is legally dissolved. Because a company is a separate legal entity, it is unaffected by the death or other departure of any of its members, and it continues to exist regardless of membership changes.
Checklist for Registering a Company in India
- Two Directors: A private limited company must have at least two directors, with a maximum of fifteen. A minimum of one of the company’s directors must be a resident of India.
- Unique name: The name of your business must be unique. The suggested name should not match with any existing companies or trademarks in India.
- Minimum Capital Contribution: There is no minimum capital amount for a company. A company should have an authorized capital of at least 1 lakh.
- Registered office: The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NOC is obtained from the landlord.