Many of the new entrepreneurs who are well equipped and trained in their respective niches often get into the dilemma about getting over the legalities of registering a company that they wish to start.
It is important to understand the legitimacy of starting a new business and getting it registered in a legal way. If not considered maturely, it might hit you hard in the future with a huge penalty and even shut-down of business.
No matter how much time you invest in planning and raising funds to kick start your business, a little time spared for getting into legal aspects of registering a company will not harm you. In fact, investors are always interested in funding an already registered company and is sorted in legal terms.
So, we have discussed the complete procedure to register a company in India.
Here we go!
How to choose your company name?
Choosing a relevant name for your venture is as difficult as choosing a perfect business idea and planning it. People will always associate the products and services of a brand/company by its name, and it takes time for the founders to come up with an innovative way and get the domain for it.
Here are some factors to consider before choosing the name for your company.
- It should be short and easily pronounceable. Avoid complex names.
- It should align with the motives of the brand.
- It should reflect the mission of the business.
- It should be easily accessible for the domain rights.
- It should not have any similarity with the existing company.
Some of the guidelines from the Company’s Act 2013 to stay safe from any legal issues are
- Names that hold Union, National, Federal, Scheme, Statutory needs to have government approval.
- Finance companies need to have its name related to financial aspects.
- The name should reflect the objectives of the company.
- Names that include Insurance, Mutual Funds, Banks need approval from regulatory bodies like SEBI, RBI.
- The name of the company can only be changed after 3 years.
The new law made by the Ministry of Corporate Affairs (MCA) under Companies Act 2013, says that ‘Within 7 days you can get your company registered’.
Different structures of the business
To get your company registered in a specific niche, you need to know about different business structures’ technical front.
There are mainly 5 types of companies that can be registered in India.
1. Sole Proprietorship
It is the type wherein there is only one person who manages the company’s sole ownership without any interference.
You do not need any sort of government registration for this type. All you need is to have is proper documentation like a PAN card, Aadhar card, Bank account, and legal office proof. With these documents, you can register your company by seeking the help of any chartered accountant. And you are done!
2. One-Person Company
The Indian government introduced this in 2013, wherein a single person can incorporate a company and limit his liabilities with certain tax concessions.
To register this type of company, you need to,
- Apply for the approval for the name
- Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)
- Certificates of incorporation from the Ministry of Corporate Affairs (MCA).
Also, the documentation required is
- Article of Association (AoA)
- Memorandum of Association (MoA)
- Legal proof of the registered office
- Affidavit of the director, consent of the director
- Declaration certificate for the compliances
3. Partnership Firm
As the name suggests, it means having a partner for running a business with an agreement that contains respective duties and obligations, profit ratios, capital invested by each partner, and the individual partner’s rights.
It is a convenient way to start a business as the risk will be shared by both the partners and is flexible with no submission of annual reports to MCA.
4. Limited Liability Company
It is the flexible business structure that separates personal and business liabilities. In such a business structure, members are safe from liabilities like a business and personal debts and provide flexibility in tax and profit-sharing.
To register LLC, you need to,
- Apply for Designated Partner Identification Number (DPIN)
- Obtain DSC and get it registered by MCA
- Get your LLC name approved from Ministry of Corporate Affairs
- Obtain the LLC agreement by filing the incorporation form
5. Private Limited Company
It is also known as LTD., where the number of members can vary from 2 to 200. It cannot acquire funds from the public, i.e., the public cannot have held on the company’s shares. In this business structure, the company owner is liable to pay the company’s debts, which are equivalent to his shares only.
To register LTD, you need to
- Obtain DIN
- Get your name registered
- Draft MoA and AoA
- Obtain TAN and PAN applications by filing an application through SPICE e-form on the MCA portal
How To Get Your Company Registered
According to Company’s Act 2013, there are 4 important steps to be followed to get your company registered in India.
1. Obtain a DSC (Digital Signature Certificate)
It is an e-signature, which allows you to complete the company’s registration process in India online.
2. Obtain a DIN (Director Identification Number)
According to the amendment act of 2006, it is important to obtain a DIN by filing a DIN e-form.
DIN 2 form- To let MCA know about your company
DIN 3 form- To inform the registrar of directors about the DIN of all directors
DIN 4 form- To initiate any sort of changes in the form like personal details.
3. Fill new user registration form or e-form
It is about having a registered user account for filling the e-form to smoothly manage different transactions and online payment.
4. Incorporating the company
It is the final step that requires the incorporation of the company’s name, appointment notice for managers, directors, and secretary, and getting the office address registered.
- DSC (Digital Signature Certificate)
- Form 1- Incorporation of Company
- Form 32- Information about directors, secretary, and managers
- Form 18- For the address of the registered company
- DIN (Director Identification Number)
- Letter of availability of company’s name published by ROC
To get your company registered in India, we have discussed all the procedures in simple steps related to India’s business structures. To get started with your company and register using this guide.