In today’s world, everybody wants to get started with their own business/startup. So It is crucial to know how to register a company in India. Every business should register themselves, as it is important to get registered as legal compliance.
It is also one of the essential components to create the brand name of your company. A company’s brand identity is one of its precious possessions, one should first register his/her company. The whole process is online for company registration. Before we go through the process of company registration let's have a look at the types of business structures that are prevailing in India.
Business structure refers to the legal structure of an organization that is recognized in a given jurisdiction which needs to be specified while filling up the form of company registration. Choosing the right business structure is one of the important decisions needed to be taken by entrepreneurs. Here we will discuss the types of business structures included in the company registration process in India.
1. One Person Company (OPC):
OPC registration includes a single person as a shareholder. These types of companies get all the benefits that private companies get, such as they have access to credits, bank loans, legal protection, limited liability, etc. Here person and company are considered as separate legal entities.
2. Sole Proprietorship:
It is owned by a single person. The liability of the proprietor is limited to the extent of capital contributed by him for the company. Profit & loss is shared by a single person only. One of the major advantages of this is the ease of forming it & less legal procedure. According to law, proprietors & businesses are the same.
3. Limited Liability Partnership (LLP):
An LLP is a separate legal entity from its partners, each individual is liable for the amount of the money they invest. As the name suggests the partners have limited liability in the company, which means the partner's personal assets are not used for paying off debts of the company.
Individuals get the ownership and share of profit & loss for the amount he/she invested for the company. For this type of ownership, there should be at least two partners on incorporation but there is no restriction for a maximum number of partners.
4. Private Limited Company:
It is a privately held business entity. It is held & managed by private stakeholders. The liability of the stakeholders is limited to the amount of share they own in the company. The arrangement of a liability in a private limited company is of a limited partnership.
A private limited company must have a minimum paid-up capital of 1 lakh. They have to maintain higher status if the Ministry of Corporate Affairs (MCA) asks to do so.
5. Public Limited Company:
It is a company that has limited liability and offers a share of ownership to the people. Share of ownership can be acquired by anyone through owning shares of it via trading on the stock market. It can be even bought through Initial Public Offering (IPO).
A company is required to have a minimum paid-up capital of 5 lakhs and a higher amount as prescribed by the government. These types of companies are listed on the stock market.
These are the different types of business structures, now we will see how one can register a company in India.
How to Register a Company?
How to do private limited Company registration, One Person Company registration, LLP registration, Public Limited Company etc.
Step 1: Acquire Digital Signature Certificate (DSC):
According to the IT Act, 2000 has made provisions of using digital signatures on the documents which are submitted in an electronic form, to ensure the factualness of the document. The whole process of registering a company is completely online.
Step 2: Acquire Director Identification Number (DIN):
It is an identification number obtained by anyone who wants to be the director of the company. One has to provide DIN, the name of the one who wants to be director of the company & address proof in the company registration form.
Step 3: Creating an account on MCA Portal:
One has to fill-up the Spice + form to register for the company on the MCA portal. To register for the company, the director of the company has to create an account on the MCA portal. After creating an account one can fill-up the form and they can do company registration.
Step 4: Certificate of Incorporation:
Application of registration & documents is reviewed by the Registrar of companies. The verification without any queries will lead to the issuance of a certificate of incorporation of the company.
How to register a Startup in India?
1. Company must be a private limited company or LLP.
2. Company can be a startup, up to 10 years from the date of registration.
3. Company remains a startup until it has lower than 100 crores of turnover per year.
4. Must have a letter of recommendation from any incubator established in any Post Graduate College in India or letter of support by any incubator who is funded by Government of India or State Government or any incubator recognized by Government of India.
5. All the details regarding the funding must be registered with the Securities and Exchange Board of India (SEBI).
6. Firm should be approved by the Department of Industrial Policy and Promotion (DIPP).
The Whole process is online, one should go through the below steps to register a startup.
One should first register his/her company as a private limited company or LLP or Partnership firm. One should have a certificate of incorporation, PAN, and other required things.
One should register his/her company as a startup on the Startup India website by filling up the form and providing details about the business. After registering one can avail of the resources provided by the government for the startups.
To get tax exemption, companies have to get registered under the DIPP. Startups can avail of tax exemption for the first 3 years.
Uploading a bunch of documents like submitting Letter of recommendations and registration forms, A letter of funding of maximum of 20% of equity by an incubation fund, Angel Fund and private equity fund registered with SEBI, etc.
Getting a registration number on a successful application is issued after a few days of submission of the application.
Fill up the form very carefully because If any document is missing or the wrong document has been uploaded then they can charge you a fine of 50% of paid-up capital or minimum of Rs 25,000, whichever is more.
Company Registeration in India - Frequently Asked Questions (FAQs)
1. Why should I register my company?
There are various benefits of registering the startup
1. You can open your business bank account
2. Its a pre-requisite in case you have secured funding
3. Brand Recognition
4. Easy Transfer of Ownership
5. Limited Liability Protection
2. What is Spice + form?
Spice stands for Simplified Proforma for Incorporating a Company Electronically. It is a form used for
1. Name Reservation of a company
2. Incorporation of a company
3. Allotment of DIN