Technology has opened up huge opportunities for creative, entrepreneurial minds. In India, young minds are coming up with innovative solutions every day and progressing in the path of development. If you’re also thinking of setting up your own business in India, then you’ve landed at the right spot!
Starting off!
You need to have a detailed business plan. It will help you predict the near future action items and avoid mistakes.
Main Difference between Private Limited and Public Limited Companies
Depending on the type of investor and business needs, you can choose to form your business entity under the following categories: Private Limited Company or Public Company.
| Private Company | Public Company |
| A private company’s name ends with Pvt.Ltd. | A public firm’s name ends with Ltd. |
| You need at least 2 people to start a private firm. | You will require a minimum of 7 members to start a public firm. |
| You may have a maximum of 200 members in a private firm. | There’s no limit for members in a public firm. |
| Requires at least 2 directors to manage and head the company | Requires 3 directors to manage and supervise the company |
| A private firm cannot invite the public to subscribe for its shares. | A public firm can invite the public to subscribe to its shares. |
Registration Types and Process in India
Private Limited Company
Registering your company as a private limited separates business assets from personal assets. The shares of the company can be sold or transferred from one person to another.
Process of registration involves:
- Getting a unique Directors Identification Number(DIN).
- You will need your Pan Card, Aadhaar Card, Bills, etc.
- Fill your name approval application first.
- You’ll need Memorandum of Association(MoA) and Articles of Association(AoA).
- Get your PAN and TAN applications on MCA’s website. That’s all you need!
Partnership
“Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm-name”.
The roles, responsibilities, shares are clearly stated in a legal partnership document. The revenue is shared between the partners according to the legal agreement. When there are losses, the partners are responsible to pay up to cover the losses. Personal assets may be used to compensate for such losses.
Limited Liability Partnership (LLP)
Business assets are separate from business assets in LLP. If the company incurs losses, partners are not liable to cover up the losses through personal assets. This kind of partnership is a higher credibility rate among investors.
Here’s how you can register under LLP.
- Fill an online DPIN (Designated Partner Identification Number) form
- Apply for your Digital Signature Certificate and register it on MCA portal
- Apply for LLC name approval from the Ministry of Corporate Affairs
- Register the business under LLC and obtain your LLC agreement
Proprietorship
If a single person is starting a business of his own, she / he can register the business under sole proprietorship. The single owner will fund the business, take the profits, and cover up for losses. Both personal assets and business assets are not separate under sole proprietorship.
You’ll need the following documents to register a business under Sole proprietorship.
- Pan Card
- Aadhaar Card
- Bank Account Details
- Proof of Office Address (Agreement)
Contact a chartered accountant or a company secretary to help you with the registration.
One Person Company (OPC)
Under a new act, you can now register a company without having a minimum of 2 directors. This is a little different from sole proprietorship. An OPC firm has tax benefits and a person can be the sole director and retain 100% of the company’s shares. OPC lets you separate personal assets from business assets and gives your firm a legal recognition.
You need to obtain Digital Signature Certificate, Director Identification Number, and application for name approval. You’ll need Memorandum of Association(MoA), Articles of Association(AoA), proof of registered office, Affidavit and director’s consent, a declaration about everything that’s been submitted.
Finally, fill the forms with Ministry of Corporate Affairs (MCA) and collect your certificate of sole proprietorship.
Section 8 Company
If you’re company comes under Non-profit organization, then you can register it as section 8 company. You may promote any form of art, education, charity, environment and climate change, social welfare, research, and religion. If you are a section 8 firm, you will not have limited or section 8 in the name.
General Process of Business Registration in India
Listed below are the four most important steps in registering your company:
- You will have to acquire a Digital Signature Certificate(DSC)
- You have to obtain a Director Identification Number(DIN)
- Complete all application/ eForm
- Incorporate your company
Contact BSJ to incorporate your business in India today! They can help you with Private Company Registration, LLP Registration, OPC Registration, and Foreign Company Registration.