Whenever any one comes up with a business idea he or she needs an entity in order to implement the same idea in the market. There are various types of entities under the Indian company law out of which the business owner can select one as per his or her business requirements. Among the top choices of entrepreneurs, private limited company registration is one. This is because of its various benefits and features. It is really important to choose the right entity for your business in order to make it successful. We saw various instances where people end up choosing the wrong entity and later their business has to pay for the same. Hence in order to save your business against any such risk must choose an entity with the help of a professional.
What do you mean by Registration of Company?
Process through which companies or we can say different types of entities get registered with the respective authorities is called registration of companies in India. This registration has been completed as per the process given under the Companies Act of 2013. Before this act Companies Act of 1956 was prevalent. By the registration of the business its reliability, credibility and trustworthiness in the market got increased which helps in the business growth.
Overview of Various Types of Companies in India
There are many kinds of company or entity registration in India, covering its salient features, benefits, drawbacks, legal prerequisites, and qualifying standards.
Private Limited Company
The incorporation of a private limited company (Pvt. Ltd.) is a common option for Indian companies because of its unique benefits and legal framework. Some of the key elements of such kind of entities are given below:
- Features include a restricted role for stockholders, a minimum of two directors, and a separate legal entity.
- Benefits include trustworthiness, access to finance, and limited liability protection.
- Complicated procedures and increased compliance needs are some drawbacks of such entities
- The legal requirements include the filing of the AOA, MOA, and two directors and shareholders.
Limited Liability Partnership Firm (LLP)
We require two minimum shareholders, at least one of whom must be an Indian resident, to incorporate as an LLP. A Digital Signature Certificate (DSC) and DPIN must be obtained by authorized collaborators. Some of its key elements includes the following:
- Features include low minimum capital requirements, restricted liability for partners, and an overlap of a business and partnership.
- Benefits include flexibility, decreased compliance, and limited responsibility.
- The drawbacks include perception problems and limitations on financing via equity.
- Legal prerequisites include the filing of an LLP agreement and a minimum of two selected partners.
One Person Company (OPC)
Bringing simplicity to compliance and ongoing operations, an OPC registration serves lone proprietors looking for limited liability protections. A single person serves as both the director and shareholder of the company. Some of the basics of the OPC are discussed below:
- Features include limited liability, one director or stakeholder, and one entrepreneurial.
- Benefits include consistency, reduced compliance, and limited liability.
- Limitations on ownership and sustainability are drawbacks.
- Legal obligations include filing an AOA, MOA, nominated director, and sole director or shareholder.
Sole Proprietorship Firm
The most basic type of business structure is a sole proprietorship, which allows for simple company or entity registration and oversight but comes with limitations on capital access and limitless liability. It also eliminates any legal separation between the individual and the company. Key elements of such kind of entities are:
- Features include the most basic form, limitless culpability, and no legal difference.
- The benefits are minimal conformity, control, and ease of setup.
- The drawbacks include unrestricted obligations, restricted financial availability, and problems with credibility.
- Legal prerequisites include Acquiring the required licenses and permits; not requiring official company registration process.
Public Limited Company
A public company is a kind of corporation with limited liability that sells stock to the public at large, and 200 people may be shareholders. This entity is suitable for the big firms because of its elements and various features which are discussed below:
- The benefits include the possibility of raising large sums of money through initial public offerings. increased shareholder liquidity as a result of stock exchange activity.
- The drawbacks include increased costs related to initial public offerings and continuing compliance, stricter regulations, and adherence duties.
- The legal and eligibility criteria are when offering shares to the public, a prospectus must be filed, or a minimum number of 7 stockholders and three board members must be present.
Broad Comparison of Various Types of Company Registration
A comparison of the numerous company registration process forms such as Private Company Limited, Sole Ownership, Public limited company, OPC registration, LLP registration etc, available in India are as follows:
Registration Process of Partnership Firm
To set up a partnership firm, one must create a partnership deed, file it with the Registrar of Firms, and receive the entity’s PAN. Create a partnership agreement that specifies the conditions of the partnership. In the territory where the company is located, register the partnership certificate with the Registry of Companies. Get the partnership organization’s Permanent Account Number (PAN).
Registration Process of LLP
This company needs two or more partners who can oversee directly for company registration in india.
- Pick the proper title and verify that it is accessible.
- Submitted an LLP incorporation application form to the Ministry of Corporate Affairs (MCA).
- Compose the LLP agreements and upload them.
- Acquire for the LLP a PAN and TAN (Tax Deduction and Collection Account Number).
Registration Process of Private Limited company
As required by the Companies Act of 2013, a private limited company has a type of business that has stricter legal obligations, such as annual filings, meetings of boards, and auditing standards.
- The company will receive the Digital Signature Certificate (DSC) and Director Identification Number (DIN).
- Use the MCA website to secure a distinctive title for the company.
- Draft both the memorandum of association (MOA) and the AOA.
- Submit the final documents to the Registrar of Companies (ROC) and check company registration.
- Get the ROC’s certification of the registration of the Company.
Registration Process of Sole Proprietorship Firm
Being a sole proprietor exposes the owner’s assets to the risks and liabilities of the firm because it does not provide limited liability protection. No particular certification is needed. If you’d like, you can begin doing business under a business name or your name. However, according to the company’s needs, you might need to get particular licenses and permissions.
Registration Process of Public Limited Company
Public business mandates three executives and at least seven stakeholders to allow for more varied leadership and a larger ownership interest.
- Collect the directors’ DIN and DSC.
- Use the MCA portal to set up the company with a distinctive name.
- Draft the articles of association (AOA) and the memorandum of association (MOA).
- Submit incorporation paperwork to the Registrar of Companies (ROC), such as the MOA, AOA, and entity registration forms.
- If a private offering is taking place, either issue an offer letter or file an announcement in its place.
- Get the ROC’s Certificate of Registration.
Conclusion
If you are the one who is thinking about starting your own business, then you must understand the value of choosing the right entity. Hope the current right up has given you an idea regarding the various types of entities given under the company law of India. Many times we saw that people choose Pvt Ltd Company Registration in India blindly without knowing about it fully. Whenever you want to register a company you must consult with an expert so that he or she can help you out to choose the right entity as per your business requirement.
FAQs
- How many types of companies are there?
Broadly there are six types of companies in India which include private companies, public companies, LLP, OPC, partnership firms, and sole proprietorship firms.
- What are the different types of registration of companies in India?
Private Limited, Public Limited, LLP, OPC, Partnership etc are the main types of company registration in India.
- Is there a dedicated support team at Startupfino to address queries related to company or entity registration?
Startupfino assists in the process of registering and has a dedicated support staff to answer questions about online company registration.
- How can individuals get started with Startupfino’s services for registration of companies?
By going to Startupfino’s webpage and choosing their preferred service package, individuals may start the procedure of utilizing their services for incorporation and getting started on the path of effectively forming their firm.
- What distinguishes Startupfino from other service providers offering company or entity registration assistance?
Personalized assistance from specialists, clear costs, and an easy-to-use online platform for the efficient administration of registration of companies set Startupfino apart from other vendors.
