In the year 2022, we see many people wanting to become an entrepreneur and start their own businesses. But the problem they face is that they are unaware of how to get their business registered.
In India, companies need to register their business, without registering their business will be considered an illegal business. This will bring them a lot of legal actions against them.
In recent times, the Central government and state governments have given clear and simple steps for entrepreneurs to register their businesses.
Registering your company is not only a legal obligation but it also brings a lot of benefits. A well-registered company can capture a higher market and gain consumer trust whereas unregistered companies are considered to be non-trustworthy competition.
Registering company- Benefits
- Protects against personal obligations as well as other risks and losses.
- Increases the attraction of consumers while also building goodwill.
- Provides reputable investors with bank credits and great investment possibilities in a straightforward manner.
- Covers the need to safeguard the company’s assets.
- increased commitment to prosperity and stability
- Increases the ability to expand and grow massive
In this article, we will discuss how to register your company according to the Company Act, 2013. In easy steps, we will discuss the registration process.
Steps to Register a Company
Step 1- Choosing the right company type
In India currently, there are five types of company structures. Every structure has different opportunities and challenges. While choosing your company you need to face many issues like legal responsibilities, profit sharing getting, finances, etc.
You can choose among five types of company structures that the Indian government permits.
- Sole Proprietary Company
A sole proprietor company is a company that means that there is only one owner of the company. This company is controlled by a single entrepreneur. The individual can be a small businessman, self-employed, or maybe a freelancer. There are many benefits of a sole preparator company as mentioned below
- Becomes easier for the owner as it is an expensive process for doing his business as it requires very minimal or no fees as well as it is not a time-consuming process when it comes to paperwork.
- Government has very few regulations for the owner of sole proprietorship and they also support them.
- The government also gives tax benefits to the sole proprietor as they only pay the personal income tax on profit and from their business.
- Hindu Undivided Family
In this business, they will be one person that is the eldest member of the family who is known as Karta. He is the one who takes the decision for the business. Karta has the power of attorney of the family. You would like to choose a Hindu undivided family and the reasons are given below
- You can choose a Hindu undivided family if you don’t want to go to any other company or business or if you don’t want any external stakeholders to operate your family-owned business.
- All the members of Hindu undivided families need to pay equal tax as they are not exempted from any tax.
- The profit earned in the business will remain in the family.
- Limited Liability Partnership
In this method of company structure, there is a partnership between the group where some or maybe all partners will be bounded with limited liability.
- There should be a minimum of two partners in an LLP company. There is no limit on the maximum number of partners in the company.
- There is very less legal compliance in LLP.
- You can also get depreciation benefits and can file a tax return that requires full compliance.
- Private limited company
A private limited company is a privately owned corporation for small enterprises. Members of a Private Limited Company are only liable for the number of shares they own. Private Limited Company shares are not publicly traded.
- There should be a minimum of 2 members and a maximum of 200 members in a private limited company.
- You need to have 2 directors in your company.
- You get depreciation on taxes however most effective withinside the starting for three years.
- You need to comply with the tax filing with the registrar.
- You need to invest at least Rs. 1,00,000.
- Public limited company
A public limited company is owned by domestic and foreign partners.
- There should be a minimum capital of Rs. 5,00,000 or higher than that.
- You can get a better turnover withinside the case of a public limited company.
- Public limited companies can launch an initial public offering and offer a portion of their shares to the public.
Step 2- Digital signature Certificate
Because the enterprise registration procedure is completely online, virtual signatures are required to publish papers on the MCA site. DSC is required for all potential directors and subscribers to the Memorandum of Association (MoA) and Articles of Association (AoA).
DSC is available via government-approved certification agencies. A list of such accredited authorities is available here. DSC may also be received in only two days online from this site. The directors and subscribers of MoA and AoA must get DSC in the Class 3 category.
Step 3- Applying for DIN
After getting the digital signature certificate, the next step will e applying for DIN. The Director Identity Number (DIN) is a unique identifying number assigned to each director who intends to serve on the board of directors of a corporation. The DIN, as well as proof of identity and address, of every potential company director, must be provided in the business registration form. Fill out the SPICe+ form to get your DIN (the business registration form).
SPICe+ is a web-primarily based totally agency registration answer for acquiring DIN for up to a few directors. If the company has more than three directors who do not have a DIN, the company can be formed with three directors and must appoint additional directors after incorporation.
Step 4- Applying for new user registration
It is important to create an account on the MCA portal. You must first create a user account in order to file an eForm, complete numerous actions, and pay the applicable costs. It is free to open an account with the Ministry of Corporate Affairs.
Step 5- Application for Charter Documents
During the process of registering, the next step is to get your charter documents ready. These are the documents like the Memorandum of Association (MOA) and Articles of Association (AOA).
Memorandum of Association (MOA) – The MOA contains all of the information about the registered firm that is required during the incorporation process. It also discusses the firm’s goals and powers, as well as the relationship between the outsider and the corporate. The MOA cannot be altered after it has been produced.
Articles of Association (AOA) – This document outlines the company’s policies and procedures. It includes information on the company’s management, conduct, and bylaws that govern its internal affairs. The AOA is meant to complement the MOA, although it can be amended if required.
Step 6- Applying for Company name
You need to select the name of your company. It should be unique and something that relates your company name with, the company’s products and services. Your name should be different from your competitors, especially from those in the same industry.
The Ministry of Corporate Affairs (MCA) has established an online application for a business establishment called RUN (Reserve Unique Name). However, this service can only be used once. RUN cannot be re-used once it has been denied due to name similarity or inability to fulfill the Companies Incorporation Rules.
As a result, you must ensure that the recommended name is distinct and meets all of the criteria. If the application is denied, the applicant must resubmit the RUN form and pay the necessary fees.
Step 7- Register for More Information
The next step in the Indian business registration procedure is to register the company name and address, as well as the notice of appointment of directors, secretary, and management.
Form-1 must be completely filled out and submitted in order for the firm’s name to appear on the MCA website. You must provide at least four alternate names for your organization. All of the restrictions listed in the Companies Act of 1950 must also be followed by the proposed business name. Following that, you must choose one of them and file Forms -18 and Form-32, respectively, for the company’s address and the appointment of directors, secretaries, and managers.
When the forms are submitted, they are reviewed by the appropriate agencies. The entire procedure takes roughly 8-10 days. When your business registration form is accepted by the MCA, the status switches to Approved.
Step 8- Getting PAN and TAN
Obtaining a PAN (Permanent Account Number) for your company is the final step in the Indian company registration process. PAN shall only be issued to authorized agents nominated by the Union Trust of India (UTI) Investors Services Ltd or the National Securities Depository Ltd. (NSDL). The process takes around seven days and might cost up to Rs. 70.
Following the PAN, you will need to get a TAN (Tax Account Number) for your company. It may be obtained from any Assessing Officer in the Income Tax Department of your state. This takes around one week and costs approximately Rs. 60.
Through this process, your business must then be registered with the Office of Inspector, Shops, and Establishment Act (State/Municipal). The form comprises information such as the names of the management and employer, the name of the establishment, the postal address, and the valid category. It should be delivered to the local shop inspector’s office, together with any necessary fees. The Inception Act must be registered within one month of your firm’s establishment.
The procedure of registering a corporation in India is a legal obligation that all business owners must undertake. The business registration procedure, including name, DIN, and other prerequisites, takes around 7 working days.
Apart from these, there are some important documents required during the registration of the company such as:
- PAN Card
- Address and Residential Proof
- Election Card or Voter Identity Card
- Ration Card
- Driving License
- Electricity Bill
- Telephone Bill
- Aadhaar Card
While applying for registration of the company you need to hire a lawyer or a CA or an agency. It is very important because
- It is a very complicated process of registering through the website despite detailed explanations given by the ministry of corporate affairs. If you are new, you may make any mistakes.
- As mentioned above MCA site requires a digital Signature is necessary to register an internet company in India, but an individual with no prior experience may not know how to get a digital signature.
- To receive a Digital Signature, you must also visit authorized sources. To add to the complication, the websites of companies that provide Digital signatures are often a little confusing.
- Rather than going through the difficulty of establishing your company in India in 2019, call your Chartered Accountant, Lawyer, or an external firm.
- Maybe the lawyer/CA/Agency can be an expensive option, but they will help you in registering your company in lesser time and effort.
- They could be a tad pricey. However, it will surely help you register the company more quickly and with fewer hassles.
As we have seen in this article how to register your company according to the companies act 2013, with the guidance in 2022. We can see registering a company is a very simple process but still holds complex formalities. The major reason that makes this process complex is that there are a lot of documents required and verification for company registration from the Central and State government.
Every company with a high brand name or registered under the company act because it is mandatory to register your company in India. Even though this process will bring the tax obligations but also brings a long-term and stable growth for the company. We can also say during registering your company memorandum of association and articles of association are the most important documents of your company. The company registration involves various simple steps that you need to fulfill under the Company Act 2013. You need to create these documents without making any mistakes.
It is not easy for a new person to go through all the complex processes for himself, So in this situation, you can hire a lawyer or a CA to help you out and register your company. If you are hiring a professional Who has a great amount of experience, you will be able to complete the process within 7 days or it may take a long period of time.