Are you planning to register a company? 

Are you unsure which type of company aligns best with your business goals? 

Here comes the answer. This comprehensive guide will answer every query that is in your mind related to company registration in India. Certainly, the first thought of registering it defines your first step toward establishing a legal entity that is credible and allows financial goals to come true. 

Why Register Your Company?

Multiple benefits of a company attract you to register a company legally. Let’s dive into the advantages that this idea brings: 

1. Legal Recognition—Registration formally brings recognition to your business idea as a separate legal entity that also protects personal assets. 
2. Limited Liability Protection—Registration allows shareholders to be its part. It means that they are only liable for the company’s debts. And the debt will be measured up to their shareholding. 
3. Tax Benefits – As a legal entity, companies are able to enjoy various tax exemptions and deductions, which are mentioned under the Income Tax Act. 
4. Enhanced Credibility – A registered venture attracts customers, investors, and financial institutions as a trustworthy entity. It helps in building corporate relationships. 
5. Easy Funding Access – Registered companies enjoy a seamless journey to raise funds through loans, venture capital, and investments. 
6. Perpetual Succession – The ultimate benefit of this registration is that the company steadily holds its existence even if its ownership changes over time. 

Types of Companies To Register in India

Before disclosing the steps to register a company, understand the types of companies that best suit your commercial goals. 

1. Private Limited Company (Pvt. Ltd.)
   • It is the highly recommended and most preferred business structure.
   • It needs a minimum of two directors and a similar number of shareholders.
   • Shareholders enjoy limited liability protection. 
   • This is the best alternative for startups and growing ventures. 

1. Public Limited Company (PLC)
   • It can be started with a minimum of three directors and seven shareholders. 
   • This is ideally for the businesses that want to raise capital through public investment. 
   • It involves a little more regulatory compliance than private limited companies. 

1. One Person Company (OPC)
   • For those who want to solely commence and operate, OPC is for those corporate entities. 
   • Being a single owner, this type of company brings limited liability protection. 
   • In terms of regulatory requirements, it has fewer tantrums than a Pvt. Ltd. company. 
2. Limited Liability Partnership (LLP)
   • This type of company merges the benefits of both a partnership company and a limited liability company. 
   • It requires at least two designated partners. 
   • Owners endure less compliance burden. 
3. Sole Proprietorship
   • This company is owned by a single person who has its full control in his hands. 
   • No separate legal identity required from the owner.
   • This is ideally for small businesses, including freelancers. 
4. Partnership Firm
   • Being a partnership firm, it is incorporated with at least two partners.
   • This firm is regulated by the Indian Partnership Act, 1932. 
   • It does not involve much legal formalities, but certainly, it lacks limited liability protection. 

Steps to Register a Company in India

Now that you are aware of different types, here come the steps involved in a company registration. These steps are defined as per the laws and regulations. 

Step 1: Choose a Unique Company Name

The process starts with a unique name of the company, which must not resonate with any existing company name or trademark. For availability and uniqueness, you can check the listed names on the Ministry of Corporate Affairs (MCA) portal.

Step 2: Procure a Digital Signature Certificate (DSC)

As you are done with the name selection, obtain a Digital Signature Certificate (DSC) for the directors and shareholders. 

Step 3: Get a Director Identification Number (DIN)

Next comes a Director Identification Number (DIN). It is associated with all directors, who can be requested through the SPICe+ form on the MCA portal.

Step 4: Draft and File Incorporation Documents

• Memorandum of Association (MoA) – It documents the company’s defined objectives and scope to scale.
• Articles of Association (AoA) – For governing the company under a legal framework, AoA is laid down, which consists of its internal rules and regulations. 

Step 5: Submit Incorporation Application (SPICe+ Form)

The application for incorporation is submitted through the SPICe+ form. It’s a crucial step in company registration, which also involves PAN, TAN, and GST registration. 

Step 6: Obtain Certificate of Incorporation (CoI)

As the submitted documents are verified, the Registrar of Companies, or ROC, finally issues the Certificate of Incorporation (CoI). Once issued, your company is officially recognized as a business entity. 

Post-Registration Compliances

Simply registering a company is not sufficient. Certain rules and regulatory requirements are a must to follow post registration. Here they are for your guidance: 

• Opening a Business Bank Account – To keep your financial transactions on track, opening a business bank account is necessary. 
• GST Registration—This is for the companies that annually make a turnover exceeding ₹20 lakh (₹40 lakh for goods-based businesses).
• Tax Filings – Annual income tax return filings become mandatory for a registered company. 
• ROC Filings – Regular updates about the company and annual returns must be in the knowledge of the MCA. So, you have to do it mandatorily. 

Accounting & Auditing—This is mandatory for private and public limited companies. They must maintain proper accounting records and pass through audits religiously.

Company Registration Services – Why Do You Need Professional Assistance?

Unlike it sounds, the company registration is not a straightforward process. It involves a lot of legal paperwork. Besides, handling compliance can be tricky. Professional company registration services or a company registration consultant can guide you through it seamlessly. 

• Choosing the Right Business Structure—The expert registration consultants are habitual in analyzing your business requirements, and hence, they suggest the most suitable entity. 
• Ensuring Legal Compliance—Being with a consulting partner is a blessing because he or she guides you on how to avoid penalties and align business activities as per regulations. 
• Faster Processing—Professional guidance speeds up the process of registration, which prevents unnecessary delays and hassles. 
• Post-Incorporation Support – A startup does not learn all about tax filings, GST registration, and ROC filings. With professional support, these processes become way easier. 

Common Mistakes to Avoid During Company Registration

1. Choosing an Inappropriate Business Structure – Sometimes, you may select the wrong type of company, which often ends up in tax inefficiencies and also adds compliance burdens. 
2. Errors in Name Selection—Selecting a unique name cannot be like a walk in the park. But a consulting partner can make it, which further prevents rejection of a trademark. 
3. Incomplete Documentation—If you don’t have all supporting documents ready, or the documents show incorrect details, the delay is inevitable. 
4. Ignoring Post-Registration Compliance—Inability or failure to comply with tax and regulatory norms can attract penalties, which is another concern. 

Conclusion

Registering a company in India is a crucial step toward establishing a successful business. With the right guidance, proper documentation, and adherence to legal norms, the process can be seamless. Company registration services ensure a hassle-free experience, helping entrepreneurs focus on their core business operations.

References:

• https://caaq.in/comapny-registration-india