Choosing the right company structure for your business is an integral decision that will shape your future. Hence, it is one that requires a lot of research, planning and commitment. The business structure you choose will decide your paid-up capital requirement, registration procedure and compliance norms. As a result, going with the best structure will help you run an efficient and effective operation that will enable you to meet your company objectives.
In case you have chosen the private limited company structure, finding the right partner to help you incorporate is equally important. As per Indian law, any business that operates within the country must mandatorily obtain the required business registration certificate. Let us now quickly look at why you need to complete your company registration, and what the process entails.
What are the options available for company registration?
Before finalising on a business structure, entrepreneurs must look at all the options available to them. India allows the following types of business structures for incorporation, and each one is suitable for a particular type of business.
- One Person Company: Introduced in 2013, a One-Person Company is perfect for entrepreneurs who wish to start their business immediately. It requires only one promoter or shareholder and is an advanced type of sole proprietorship which allows for more legal protection.
- Limited Liability Partnership: As the name suggests, an LLP has a separate legal existence and is therefore perfect if entrepreneurs want liability protection. This company structure suits small and medium-sized endeavours that do not have very high capital requirements.
- Private Limited Company: One of the most popular business structures in India, a company registration online is a separate legal entity, different from its founders. The structure is suitable for medium and large enterprises that wish to grow in the future and raise funds as and when required.
- Public Limited Company: It serves as an association of shareholders who enjoy legal protection under law after incorporation. It is best suited for large businesses that frequently require capital infusion.
- Sole Proprietorship: The simplest business structure to start as it requires no formal registration, proprietorships offer the least legal protection. However, these are perfect for business owners who wish to start operations immediately with the least compliance norms.
Why is choosing the right business structure vital?
Now that you are aware of the options available, let us examine why choosing the appropriate business structure is vital. Most young entrepreneurs take the help of experienced legal and business consultants while deciding the right company structure for a business. Here’s a quick look at the different ways in which your business structure impacts your company.
- Decides what Income Tax returns to file, and when to file them.
- Different structures have different levels and degrees of compliance requirements.
- Decides whether or not companies have to file their annual returns with the Registrar of Firms/Companies.
- Determines whether the company’s account books have to be audited by a professional Chartered Accountant or Company Secretary.
- Decides the capital requirement and other licenses or registrations the business might need to operate within the country.
How to register a Private Limited Company in India?
- First and foremost, the entrepreneurs will have to decide a name for the company, and file an application to check for its availability.
- Next, the directors and shareholders will have to apply for the required legal documents, such as a Digital Signature Certificate and Director Identification Number. Both of these are vital to completing authorisation while filing returns and forms online.
- Once they have these in order, they will have to meet with a legal expert and draft the required Articles and Memorandum of Association.
- Afterwards, the entrepreneurs must register online on the MCA Portal to apply for a Certificate of Incorporation. They will have to upload the required supporting documents and pay the requisite processing fee to complete the process.
- The executives will then verify all the details provided before issuing an Incorporation Certificate for the company.
Documents required for Private Limited Company Registration in India
- ID proof of all directors and shareholders – PAN card, Aadhaar Card, Voter ID, Driving License or Passport
- Address proof of all directors and shareholders – Latest Telephone/ Gas/ Water/ Internet/ Landline/ Electricity Bill or Bank Account Statement
- Proof of address of the registered office in India – Latest electricity/ Gas/ Water/ Landline/ Internet bill, Property tax receipt, Rental agreement or Property Registration Certificate
- NOC from the landlord in case of rented properties
- DIN and DSC of all directors
Why register as a private company in India?
A private limited company registration provides several advantages, and some of the main ones have been highlighted below.
- Provides legal protection against personal obligation and liability
- Helps improve goodwill, credibility and trustworthiness
- Enables businesses to attract better investors and creditors
- Helps control, mitigate and limit the risks faced by the shareholders
- Creates a separate legal entity that enjoys perpetual succession
- Makes it easier than ever to raise the required capital
- Better borrowing capacity when compared to other structures, such as LLPs
- A chance for partial and complete sale or transfer of ownership making it easy to exit
- Ability to expand internationally and explore new markets with ease
As you can see, company registration in India can be a long and complicated process if you don’t have the right help. In case you are on the lookout for a partner to help you with the registration process, we recommend VakilSearch. Their team of legal experts will help you choose the right business structure and will be by your side every step of the way. Additionally, they also provide a slew of compliance services, such as IT filings and other documentation to make it easier for you to run your business. So, what are you waiting for? Reach out to VakilSearch and build the company of your dreams.
Also Know how to register a company