Introduction
Starting a business in India requires choosing the appropriate business structure and completing the necessary registration process. The choice of structure impacts everything from liability to compliance requirements. In this guide, we’ll explore the main types of company registrations available in India, along with detailed steps for registering each.
Types of Company Registration in India
Here’s an overview of the common types of companies that you can register in India:
1. Private Limited Company (PLC)
2. One Person Company (OPC)
3. Limited Liability Partnership (LLP)
4. Public Limited Company
5. Sole Proprietorship
6. Partnership Firm
7. Section 8 Company (Non-Profit Organization)
Let’s take a look at each type, including eligibility criteria, benefits, and registration process.
1. Private Limited Company (PLC)
A Private Limited Company is a popular structure for small and medium-sized businesses. It provides limited liability to its shareholders and allows easy transfer of ownership.
Key Features:
• Minimum 2 shareholders and 2 directors.
• Maximum of 200 shareholders.
• Limited liability protection.
Steps to Register a PLC:
1. Obtain Digital Signature Certificate (DSC) for directors.
2. Apply for Director Identification Number (DIN) through the Ministry of Corporate Affairs (MCA) portal.
3. Reserve the Company Name using the RUN (Reserve Unique Name) form on the MCA website.
4. File the Incorporation Form (SPICe+), including Memorandum of Association (MOA) and Articles of Association (AOA).
5. Obtain Certificate of Incorporation (COI) from the Registrar of Companies (RoC).
6. PAN and TAN Registration: The company will automatically receive PAN and TAN after the COI is issued.
2. One Person Company (OPC)
One Person Company is a suitable structure for solo entrepreneurs who want limited liability without the need for additional partners.
Key Features:
• Only one shareholder and director (can be the same person).
• Limited liability protection.
• Suitable for single-owner businesses with low risk.
Steps to Register an OPC:
1. Obtain DSC and DIN for the director.
2. Reserve the Company Name on the MCA portal.
3. File Incorporation Form (SPICe+) along with MOA and AOA.
4. Obtain Certificate of Incorporation from the RoC.
5. PAN and TAN Registration: Auto-issued with COI.
3. Limited Liability Partnership (LLP)
An LLP combines the advantages of a company and a partnership. Partners have limited liability, and there is no minimum capital requirement.
Key Features:
• At least two partners required.
• No minimum capital requirement.
• Limited liability for partners.
Steps to Register an LLP:
1. Obtain DSC for the partners.
2. Apply for LLP Name Reservation using the RUN-LLP form on the MCA portal.
3. File Incorporation Form (FiLLiP) with details of the partners and LLP agreement.
4. Submit LLP Agreement within 30 days of incorporation.
5. Obtain LLP Incorporation Certificate from RoC.
4. Public Limited Company
A Public Limited Company can offer shares to the public and requires a larger capital base, making it suitable for large businesses with growth potential.
Key Features:
• Minimum 3 directors and 7 shareholders.
• No limit on the maximum number of shareholders.
• Ability to raise capital from the public.
Steps to Register a Public Limited Company:
1. Obtain DSC and DIN for directors.
2. Reserve the Company Name on the MCA portal.
3. File Incorporation Form (SPICe+) with MOA and AOA.
4. Obtain Certificate of Incorporation from RoC.
5. Apply for PAN, TAN, and GST Registration.
5. Sole Proprietorship
A Sole Proprietorship is a simple business structure for single owners and is commonly used by small businesses. It doesn’t have a separate legal identity, and the owner has unlimited liability.
Key Features:
• Owned and managed by a single individual.
• No formal registration required.
• Unlimited liability for the owner.
Steps to Register a Sole Proprietorship:
1. GST Registration (if applicable).
2. Udyam Registration (optional for MSMEs).
3. Shop and Establishment License (based on state laws).
6. Partnership Firm
A Partnership Firm is owned by two or more people and governed by a partnership deed. It’s relatively easy to set up but lacks the liability protection of a private limited company or LLP.
Key Features:
• At least two partners.
• No mandatory registration (although recommended for legal benefits).
• Unlimited liability for partners.
Steps to Register a Partnership Firm:
1. Draft Partnership Deed specifying terms of partnership.
2. Register the Deed at the Registrar of Firms (optional but recommended).
3. Apply for PAN in the name of the partnership.
4. GST Registration (if applicable).
7. Section 8 Company (Non-Profit Organization)
A Section 8 Company is established for charitable purposes, such as promoting arts, commerce, education, or welfare.
Key Features:
• Cannot pay dividends to members.
• Requires approval from the Registrar.
• Tax benefits for donations.
Steps to Register a Section 8 Company:
1. Obtain DSC and DIN for directors.
2. Reserve the Company Name on the MCA portal.
3. File Incorporation Form (SPICe+) with MOA and AOA specifying charitable purposes.
4. Apply for a License from the RoC to operate as a Section 8 Company.
5. Certificate of Incorporation is issued upon approval.
Documents Required for Company Registration
Regardless of the type of company, the following documents are generally required:
• Identity Proof: PAN card, passport, or Aadhar for Indian nationals; passport for foreign nationals.
• Address Proof: Recent utility bill or bank statement.
• Proof of Registered Office: Rental agreement or ownership proof, along with a NOC from the landlord.
• Additional Documents: Partnership deed, LLP agreement, or MOA/AOA depending on the type of business.
Additional Registrations After Incorporation
Once the company is registered, additional registrations may be required, such as:
• GST Registration: For businesses with turnover exceeding Rs. 20 lakh (service-based) or Rs. 40 lakh (goods-based).
• Professional Tax Registration: Mandatory in certain states.
• ESI/PF Registration: For companies with a certain number of employees.
• Shop and Establishment License: State-specific license for physical establishments.
Conclusion
Selecting the right type of company structure is essential for long-term success. While Private Limited Companies and LLPs are generally preferred due to limited liability protection, Sole Proprietorship and Partnership Firms offer simpler setups for small businesses. Startups and non-profit entities may benefit from the unique benefits of OPC and Section 8 Company structures.
Registering a company in India requires careful attention to detail and legal compliance. Working with a professional service provider, like Nitai Advisors, can simplify the registration process, ensuring that all requirements are met efficiently and accurately.
This guide provides a foundation for understanding the company registration process in India, enabling you to choose the best structure for your business. Let me know if you’d like any specific section elaborated on further!
⬇️
Comments