India’s business landscape has grown rapidly over the past few years. The government of India has passed many business laws for its country so that all types of businesses operate within a legal framework. Individuals must choose the correct company structure for long-term growth and compliance with the laws. Choosing the correct structure for your company is crucial since the corporation would be in tyranny without it. After reading this article, the reader will have a clear understanding of:

• Types of Business Registration in India
• Documents necessary for a company’s registration
• Online registration process of a company or business
• The compliance requirements after registration
• Suggestions to register your company faster.
• How can Finocircle help you register your company?

Types of business registration in India

Types of companies:

The three most common types of company registrations in India are:

• Private limited company (Pvt Ltd)
• One-person company (OPC)
• Limited Liability Company (LLP)

According to the Companies Act 2013, companies can be categorized into many types:

Private Limited Company

A private company is a type of business or firm that can only be owned privately. The public cannot buy its shares.

Minimum requirement:

The company can only have members between a range of 2 to 200, according to [SECTION 2(68)]. Moreover, if more than two individuals buy the shares combined, they would be treated as a single member. It requires MOA, AOA identity proofs, address proofs, and declaration forms like INC-9 and DIR-2 for applying. Private companies are also required to conduct annual general meetings (AGMs) and must file annual returns using form MGT-7 and financial statements using form AOC-4

Suitability:

This type of company suits individuals looking for scalability and funding opportunities.

Online registration:

A private limited company (Pvt Ltd) can be registered on the Ministry of Corporate (MCA) online portal.

One-person company

A one-person company (OPC) is a type of company that an individual privately owns. It simply means that the company can have only one member or shareholder. Moreover, an Indian resident nominee must be appointed to take over the company in case of unforeseen circumstances, e.g., the director’s death. A one-person company must file annual returns and financial statements.

Minimum requirement:

According to the Companies Act 2013, a one-person company is a type of private company. The only difference is that the minimum number of stakeholders in private companies should be 2, while in a one-person company, a single person can form the company.

Suitability:

It is suitable for individuals who want to run their business solely.

Online registration:

Its online registration can be done on the Ministry of Corporate (MCA) portal.

Limited liability partnership (LLP)

In a limited liability partnership, the owners have limited liability. If the business fails, the owners don’t lose their assets or money; they only lose the money they invested in it. Limited liability partnership company registration in India requires less documentation than a private limited company (Pvt Ltd).

Minimum requirement:

There must be at least two partners to create a limited liability partnership company.

Online registration:

The Ministry of Corporate (MCA) online portal allows you to register a limited liability partnership company online.

Essential Documents Required for Company Registration

Collecting mandatory registration documents is crucial to private limited company registration in India.

For a private limited company (Pvt Ltd):

For directors and shareholders:

The directors must submit their Digital Signature Certificate (DSC), Director Identification Number (DIN), and Name approval of the company from the Registrar of Companies (ROC). They also must submit a memorandum of Association (MOA) and Articles of Association (AOA). The directors and shareholders are directed to submit their PAN cards as proof of identity through SPICe+. They are also directed to submit their address proof, for which they can submit their passport, Aadhaar card, or driving license. They also must submit a bank statement or electricity bill less than 2 months old as residential proof.

Documents requirement for One-person Company (OPC):

A one-person company must submit a director’s consent in DIR-2, a Nominee’s Consent in INC-2, the Directors’ declaration in INC-9, and a declaration by professionals in INC-14.

For the OPC registration, the directors and shareholders are directed to submit their PAN cards as proof of identity through SPICe+. They are also directed to submit their address proof, for which they can submit their passport, Aadhaar card, or driving license. They also must submit a bank statement or electricity bill less than 2 months old as residential proof. The directors must submit their Digital Signature Certificate (DSC), Director Identification Number (DIN), and Name approval of the company from the Registrar of Companies (ROC). They also must submit a memorandum of Association (MOA) and Articles of Association (AOA).

Documents requirement for Limited liability partners:

LLP companies must submit a PAN card or passport as identity proof and a bank statement or electricity bill less than two months old as address proof. All the partners must submit a Digital Signature Certificate (DSC) and a Designated Partner Identification Number (DPIN). An LLP agreement document defining the roles of all the partners must also be submitted.

Tips for faster document verification:

It is crucial that the documents be clear and scanned digitally for faster verification. Business owners should also ensure that all the information matches what is mentioned in official records. The documents should be submitted together to avoid delays.

Step-by-step online business registration process

As technology is evolving daily, companies can now register online through the Ministry of Corporate Affairs (MCA) portal. Before registering for the company, they must consider some factors.

Registration process:

Digital Signature Certificate (DSC): All directors must have a digital signature certificate (DSC) to sign documents electronically for online filing. They must apply for it by visiting a certified DSC provider.

Approval duration: The application processing time is about 1 to 3 days.

Cost: The cost of the application form is about 1000 to 2000 INR

Director Identification Number (DIN): Each director must have a unique director identification number (DIN) issued by the Ministry of Corporate Affairs (MCA).

Approval duration: The processing time of a DIN application is about 1 to 2 days.

Cost: The cost of the application form is about 500 INR

Name approval: The companies must submit the name approval request to the Registrar of Companies (ROC). The company’s name should be thoughtful and creative, reflecting the company’s objectives.

Procedure to apply:

To apply for name approval, first open the SPICe+ portal on the Ministry of Corporate Affairs (MCA) portal, enter the company type, provide the two preferred company names, and submit the application form.

Approval duration: MCA approves the application form in 2 to 3 days.

Cost: The cost of the Application form is 1000 INR.

Company incorporation form:

After the company’s name is approved, individuals can proceed with part B to register the company, in which they need to submit the AOA and MOA.

Articles of Association (AOA) and Memorandum of Association (MOA): To register a company, the director must submit the Articles of Association (AOA) and Memorandum of Association (MOA), which include the company’s main objective and operating details.

Documents submission: Submit all the forms stated above to the Registrar of Companies (ROC) through the MCA portal.

Track the application status: After submitting all the necessary documents, one should track the application on the MCA website because the ROC may sometimes raise some queries.

Post Registration compliance

Opening a Banking account: To keep finances transparent, companies must set up a company bank for all financial transactions. That bank should solely be used for the company’s financial transactions. All financial activities, such as receiving funds and performing transactions, must be done through that bank account.

Goods and Services Tax (GST) implications: If the companies engage in activities that are considered taxable, they must be registered for Goods and Tax (GST). If a company’s turnover exceeds 20 Lac INR, they must file for GST. If the directors of these companies don’t register their companies for GST, they may have to face high legal penalties.

Annual audit of accounts: Companies’ accounts are required to be audited yearly. This means a professional auditor must review and verify the account records. The company audit is done to maintain transparency and financial accuracy.

First-year compliance checklist:

Registered address verification: The companies must submit proof of their registered office address within 30 days of incorporation.

Auditor for the company: The company must appoint an auditor within 30 days of its incorporation.

Share certificates: The company must provide the share certificates to its shareholders within 60 days of its corporation.

Opening a Banking account: To keep finances transparent, companies must set up a company bank for all financial transactions. That bank should solely be used for the company’s financial transactions. All financial activities, such as receiving funds and performing transactions, must be done through that bank account.

Filing of first financial statement:

Ongoing Compliance:

To comply with the rules and regulations, the company must file annual returns using forms MGT-7 and AOC-4. It must also submit audited financial statements, including balance sheets, profit and loss accounts, cash flow statements, etc. Private companies must also arrange at least two board meetings annually.

Professional Tax Registration:

If it has employees, a company must register for professional tax. In this type of tax, the tax is deducted from the employee’s salary, and then the collected tax is paid to the state government.

Mandatory filings and deadlines:

The companies must also do some other filings under a specific duration.

INC-20A form: Companies must submit an INC-20A form, which is for declaration of commencement of business and should be submitted within 180 days of its corporation.

Form AOC-4 and MGT-7: Forms AOC-4 and MGT-7 must be filed annually to report financial statements.

Form ITR-6 or ITR-5 for LLP: LLP companies must file these forms between July 31st and October 31st every year.

Essential registrations:

Goods and Services Tax (GST) registration: If the companies engage in taxable activities, they must register for Goods and Tax (GST). If a company’s turnover exceeds 20 Lac INR, they must file for GST. If the directors of these companies don’t register their companies for GST, they may have to face high legal penalties.

Provident fund (PF) registration: If the company has over 20 employees, they must register for a provident fund (PF).

Common compliance mistakes

Most companies make common compliance mistakes, resulting in delays or penalties. Some companies delay filings, which can lead to further delays after the incorporation application is submitted or even heavy fines. Some companies also fail to monitor their cash flow and bank maintenance.

Name approvals shortcut:

Unique Company’s Name: Before applying for the certificate of incorporation, selecting a unique and appropriate company name that complies with the naming guidelines is essential. The chosen name’s availability must be checked on the Reserve Unique Name (RUN) service on the Ministry of Corporate Affairs (MCA) portal.

Common rejection reasons and solutions:

Many business owners make mistakes while registering their companies. Some of the common errors are:

Mismatched document: Sometimes, the information provided in documents doesn’t match the company’s original documents, which causes delays. To avoid this, the company should complete the application carefully and ensure the details match each document.

Non-compliance with the guidelines: Companies must also comply with the MCA rules and regulations. Sometimes, they don’t follow the MCA’s naming guidelines, which causes them to delay.

Incorrect DSC format: Sometimes, the company owner also uses the wrong DSC format, which isn’t considered authentic. The director must use the Class 3 DSC for company registrations.

Professional assistance vs. self-registration

There are many pros and cons of self and professional assistance.

Professional assistance:

Pros: Some pros of getting professional assistance are that they are experts and know more about legal compliance, which is why the error risk is very low. Due to professional assistance, the owner doesn’t have to stress about the registration process.

Cons: One of the biggest cons of professional assistance is its cost. Moreover, the client has less control over the process.

Self-registration:

Pros: Some pros of self-registration are that individuals don’t have to pay any charges, have complete control over the process, and get hands-on experience while applying.

Cons: Some of the cons of self-registration are that it’s time-consuming and that the chances of mistakes in documentation increase as the participants are not legal experts.

When to hire professionals:

Business owners can self-register but should hire professionals if their business structure is complex, and they don’t have much time to complete all the required documentation. Moreover, legal experts fill out the application, making errors less likely. This also avoids any delays. Therefore, it would be a good investment if business owners hired professionals.

How Finocircle Can Help You in registering a company?

Finocircle is a company that provides expert company registration services. Since the application process for registering a company is very complex and time-consuming, Finocircle helps individuals simplify the process in many ways. Individuals can get help from Finocircle and set up a smooth business that complies with the legal requirements.

Meeting the Legal requirements:

Finocircle’s expert team understands the legal requirements for the registration application and can help the individual avoid mistakes while applying for incorporation certificates. It can help prepare essential documents like the Memorandum of Association (MOA) and Articles of Association (AOA). It also helps register PAN, TAN, and GST. Moreover, individuals can also receive comprehensive guidance on how to apply for a Digital Signature Certificate (DSC) and Director Identification Number (DIN). Another advantage of Finocircle’s services is that individuals can save time and our company registration charges are most competitive.

FAQS

Q: How long does the DSC, DIN, and name approving application take?

Ans: The processing time for a DSC application is about 1 to 3 days, the DIN application is about 1 to 2 days, and the name approval application form is 2 to 3 days.

Q: What are some of the common compliance mistakes?

Ans: Most companies make some common compliance mistakes, which can lead to delays or penalties. Some companies delay filings, which can lead to further delays after the incorporation application is submitted or to heavy fines. Some companies also fail to manage their cash flow and bank maintenance.

Q: Why is opening an individual bank account for the company necessary?

Ans: Companies must set up a company bank for all financial transactions to keep their finances transparent.

Q: Why should we choose Finocircle and not someone else for our company’s registration?

Ans: In India, professionals generally charge up to 15000 to 25000 INR to register a private limited company and 10,000 to 20,000 INR to register an LLP company. However, Finocircle’s fee is only 1,999 INR to register a private limited company and 1499 INR per partner for an LLP company.

Q: What are some resources we can visit to register our websites?

Ans: to incorporate your companies successfully, you must visit the Ministry of Corporates (MCA) online portal. This site allows individuals to access the SPICe+ form for registration and fill out forms like MOA and AOA.