There are several reasons in India that makes it important for registering a company in India. This often happen many of the entrepreneurs wish to open their business but don’t know how to register their company.
Several legal problems can be caused if you don’t register your company in India s this is legally required.
For easy registration in India of the new companies central and state government are upcoming with several rules and codes. These helps the start-up ventures and smaller businesses to grow and get a legal status.
Registration of these companies have several benefits and also provides safety for the companies under Indian laws that govern this.
Company Registration Process in India
There are several registrations process to get your company registered in India and these processes depends upon the nature of the company. Here are some steps presented that should be followed in order to register a company in India for year 2019-
Step-1: Select your Company Structure-
Currently 5 types of companies are allowed by Indian government. One should decide carefully on the structure of your company because it will play a vital role in issues such as taxation etc.
Five major companies allowed by Indian government in 2019 are-
- Sole proprietary Company.
- Hindu Undivided Family.
- Limited Liability Family.
- Private limited Company.
- Public Limited Company.
Let’s see the benefits of each of these 5 companies.
Sole Proprietary Company
If you don’t have any partners and are a sole entrepreneur then this is the best form of a company. Since 2013, the Indian government allows a single person to own a company.
- This is ideal for start-up entrepreneurs.
- If anyone register as a start-up then the company structure will provide a three-year tax holiday.
- You are also exempt from paying tax on any dividends paid to investors in your company.
- You are liable to prevent default on borrowings and responding to lawsuits as being a sole owner.
Hindu Undivided Family.
You need to have a general power of attorney of your family known as karta if you are planning for a HUF.
- It is ideal when you don’t want to hold stake and want to operate as a family-owned business.
- All members are equally liable for paying taxes.
- Profits are always divided among all members of the family.
- All shares always remain with the family. Hence, there are no possibilities of taking over the business by any outsider.
Limited Liability Partnership.
If your company is starting with a small investment then you can choose this.
- For this you need one or more members.
- Each partner is equally responsible for the overall liabilities of the company.
- It’s also allows you to start joint ventures with a local or foreign partner.
- Liabilities are equally distributed among all partners such as for borrowings, bank loans etc.
Private Limited Company.
This is the most popular company structure in India. As it imparts a better image to clients and suppliers that’s why this is preferred over HUF by peoples.
- Ideal for high turnover businesses.
- This form of companies formed under start-up India scheme get a tax holiday up to three years after inspection.
- Accounts of such forms of companies must undergo a proper internal and external audit.
- Tax filing is completely governed by the Registrar of companies Act.
Public Limited Company.
This involves domestic as well as foreign partners as the investment is very high.
- This offers shares to all investors. Investors are provided with rights to sell their stock to others after having clearances from board of directors.
- These companies have a very high turnover.
- Numbers of shares owned by stakeholders are prime mover for deciding the distribution of profits.
- In this, the company can offer their shares to the public according to the rules and codes of the company and the government of India in compliance to IPO (Initial Public Offering).
After selection of form of company here are the steps for registering the company according to the laws of Indian Government.
Step-2: Ways for Registering a Company
Majorly there are 5 ways for getting registered. Here all five ways are listed from which one can choose anyone according to their convenience.
- Do-It-Yourself: As the name suggest you can go and get registered yourself. But this way is somehow hard and pathetic as you need to spend time, money and have to force a lot of efforts as hustling between different governmental departments. Here you can also become fool by different middlemen.
- The best considered way to get registered is through your lawyer or chartered accountant.
- The reason: A single window solution will be provided to you, you can utilise their expertise, skills, and contacts for registering your company.
- Online: Now it is very easy to register a company online. Get to the website of ministry of corporate Affairs and get access to the necessary forms. Fill and submit online with required fees.
- Online agencies: Now as the start-up companies and culture in growing rapidly in India, many of the online agencies are upcoming with the ease of registration of companies. A simple google search will show you a lot of options of such agencies.
Additional Requirements to Register Company
It’s not only the registration of the company that is needed for a start-up. Several permits and clearances are also needed for running a company.
These permits and clearances are totally dependent on the company’s type.
Therefore, here we present you some of the additional steps that you should do before you register a company.
Steps Before Registration of Company
Here are the steps that one should follow before registration of his/her company in India in 2019.
Visit chamber of commerce and industry.
There are several chambers of commerce and industry with offices in every major city of India. Reach them and find about all permits that you will require before registering your company.
- For license to employ staff or workers visit Ministry of Labour and Employment of the Central or state government.
- If you are manufacturing any stuff visit Factory registration department of the state for license.
- Municipal permits from industrial development corporation.
- License from local fire department for assuring that your office/factory/premises comply with standards of safety measures.
- Environment clearances according to the nature of your business.
This is the major licenses that you should need before starting your company or start-up.
Find investor friendly states.
This is a great idea. Several Indian states call upon investors and businessmen to register companies.
Generating employment for state, developing infrastructure, promote local raw material are some causes for doing so.
These states have focused area for encouraging entrepreneurs and attracting them through various benefits. Before registration you should look for such investor friendly states.
Register company offshore first.
This is an expensive but surely the shortest way for registering a company in India. This offshore registration of company can be done easily online and can be done without leaving India.
There are a lot of agencies that register your company in foreign with appropriate verified address along with bank details.
So, overall these are the steps required and should be followed while registering a company in India in 2019. Personally, I will suggest that avoid going abroad for companies as they have a lot of limitations under Indian laws. Please like and share if you find the article useful and helpful.