Nowadays most of us want to create our empire and want to flourish in a particular niche. But before starting a business we need to know the demands and requirements of a business structure need to follow and the perks belong with them. Company registration is one such factor that has a massive advantage of business entities that help you in the long run. Company registration is a process by which one can legalize his/her business over the preferred zone and get the authority to oversee the business activities. And it also helps you to know the boon and bane of establishing a business in that particular zone.
So if you’re someone who is planning to set up a business in India and perplexed about the Company Registration?
We have 3 types of business structures available in India, namely Sole proprietorship, Partnership firms, and Company (Pvt or public). And each of these has its own merits and demerits.
So let’s inspect these business systems that are available in India as per the Companies Act 2013.
1. Private Limited Company
This is the most sophisticated and renowned type of business entity in India. The companies belong to this clan are registered under, The Companies Act, 2013, and in this system the business assets are separated from personal assets. And hence each shareholder is responsible for his share of the total capital. And also the name of every such company should have a suffix of the words Pvt. Ltd.
Important accentuates of a private limited company
- A minimum of 2 members to a maximum of 200 and should also have a minimum of 2 directors.
- Shares cannot be traded on a stock exchange or neither invite the public to support its share capital.
The private limited company has 3 kinds of capital clause:
- Company limited by shares
Depends on the number of unpaid shares that belongs to them, the responsibility of members is limited.
- Company limited by guarantee
There will be no share capital or shareholders for a company which is limited by guarantee, instead of that there will be members who act as guarantors. And in case the company is winding up, then they contribute their nominal assets as agreed in the memorandum.
- Unlimited Company
There is no limit on the responsibility of its subscribers.
2. Public Limited Company
By simple definition, a company that is not privately limited is called a public limited company. And also the name of every such company should have a suffix of the words PLC.
Important features of Public limited company
- The company should have a minimum of 7 shareholders and 3 directors.
- No restriction to transfer shares and can be transferred to the public at large.
- A public limited company must need certification from ROC before the business gets started.
- It has more compliances.
- To trade the capital, one must have assign shares of at least £50,000.
3. Partnership Firms
Partnership business firms are more similar to the sole proprietorship. Here a legal relationship is established through an agreement between two or more individuals to run a business. And according to the deed, there will a profit share ratio between the partners and if there are losses, then each partner is personally answerable.
4. One Person Company (OPC)
One person company is the building block for every entrepreneur who wants to establish and manage a venture as a sole member. One of the main advantages of OPC is only one member is required to start the business and for the registration according to Section 2(62) of Companies Act. It is the finest method for small businesses and start-ups to create their signature in their particular fields without much hassle. Another fact is that a resident or a citizen in India can only establish an OPC.
Benefits of One person company
- Limited responsibility
Since one person is authorized for the whole business and management, he only needs to look after what he invested in a business.
- Tax flexibility and savings
- Transferability of shares
5. Limited Liability Partnership (LLP)
LLP is a flexible legal and tax unit which helps the partners to achieve benefits from the economics of scale by working as a team and hence to reduce the liability. It has two long-standing forms of business structures, called the Company and the Partnership firm. The name of every such company should have a suffix of the words LLP and need a minimum of 2 members. One of the main advantages of LLP is the partnership agreement which helps to bring partners in and let partners out.
Selecting a perfect structure for your company is technical and complex. So if you’re someone who looking to minimize your liability then OPC and partnership firms are the finest choices for you. On the other hand, if you want limited liability and don’t want to extend your asset to the venture then LLP and company form of business is the best choice. If you’re still bewildered for choosing a perfect registration method, capital requirement, type of ownership needed, and much more for your venture, then are a lot of experts out there to help with no amiss. Identify the best choice which perfectly suits your business to balance the factors like tax implications, liabilities, amount of capital required, the nature and objectives of the business, and so on.