Company Registration –
A registered company is an organization that is formed and registered with the statutory authority in compliance with the corporate law of the country. Registering a company in India is an effortless and uncomplicated process. The registration process is carried out through online mode. The Ministry of Corporate Affairs (MCA) has the online portal for company registration. Registering a company comes up with various benefits for your overall business. Registering your company elevates the position and influence of your business.
Types of companies in India –
- Private Limited Company
- Public Limited Company
- Limited Liability Partnership
- One Person Company
- Sole Proprietorship
- Section 8 Company (Non-Profit organization)
Benefits of Company Registration –
• Legal Entity – a company is a legal entity and has real existence, under the Companies Act a company is a juristic person. Thecompany has right to sue and can be sued also by a person or entity
• Helps to generate capital – A company is the only type of legal entity that can help the promoters raise equity funding from Angel Investors, Private Equity Firms, and the Stock Exchange.
• Perpetual succession – An important characteristic of a private limited company is perpetual succession. The directors, CEO, employees may come and go but still, the existence of the company remains.
• Transferability of shares – shares can be transferred to anyone the shareholder chooses.
• Owning property – a company can acquire and own property in its own name
• Legitimacy and brand awareness– Registering your company inflates the reputation and perception of your business. All global brands like – Apple, Google, Tesla, are registered companies.
• Minimize tax liability – if a Company becomes insolvent, only the assets of the company are used to clear its debts. The Directors, Shareholders have no legal liabilities and are not made bankrupt which means they can carry their business forward.
Private Limited Company –
- A private limited company is non-governmental companies, owned by finite shareholders
- A Pvt Ltd Company should have 2 directors minimum and must not exceed the limit of 15. For legal registration of a Pvt Ltd company minimum of 2 shareholders is required and the total limit of shareholders is 200.
Public limited –
• Public limited company is a company that is legally allowed to offer its shares for sale to the public. They can offer shares to the public if they choose to.
• Its stock can be acquired by initial public offerings or through trade via the stock market
• At least 7 shareholders & 3 directors are required to form a public limited company
One Person Company –
• One person company which is formed & owned by a single person
• It isa separate legal entity
• Unlike sole proprietorship the liability of shareholder or director is limited
• In one Person Company the director and shareholder can be a single person
• On owner’s death and due to some disability, the company can be succeeded by the nominee
Sole proprietorship –
• A sole proprietorship—also known as sole entrepreneurship which is run by a single individual who pays income tax on profits earned by his/her business.
• A sole proprietorship is the easiest type of business to establish, this business type is a popular choice among sole owners of businesses, individual self-contractors, and consultants.
Section 8 company (Non-profit organization)
• The intent of registering a company as a Section 8 Company is to assist social welfares purposes like, charity, education, environment protection, etc.
• To incorporate a Section 8 Company, at least 2 directors are required. Also, there is no need for minimum paid-up capital.
• It is an agreement of 2 or more people who all have agreed to share the profits among each other
• A partnership is not a separate entity, in this, each partner of the company is accountable for the debts of the business.
• In India all partnership firms are governed under the Partnership Act, 1932.
Limited liability Partnership –
• Limited liability partnership is an amalgamation of partnership and corporation
• Minimum 2 partners are required for the limited liability partnership
• There is no restriction on the numbers of the partners in LLP.
• To form LLP a low cost is required.
• The LLP act 2008 was enacted by the parliament of India in December 2008 and commenced in March 2009.