WHAT IS A COMPANY?

The word 'company' is derived from the Latin word "COM + PANIES".

(Com means 'With or together' and Panies means 'Bread')
And it originally referred to an association of persons who took their meals together. In the leisurely past, merchants took advantage of festive gatherings, to discuss business matters.

A business organization that makes, buys or sells goods or services in exchange for money is known as a Company.

In simple words, company is a made of doing business.

In the legal sense, a company is an association of both natural and artificial persons and is incorporated under the existing law of country.

In common, a company is a "legal person" or "legal entity" seperate from, and capable of surviving beyond the lives of its members.

Your business setup need to be well thought of and the most important is to decide which form of business structure or vehicle to adopt. Choice of vehicle will help you to achieve most of your entrepreneurial dreams.

Mostly, it depends on what is your expansion plans, future team size, funding requirements and business vision.

Folks, we are listing few of the most popular business vehicles, sitting on which you may ride or fly. All depends on your choice.

What Company options are available for Registration in India?

Before jumping on to choosing your option, we need to know two important words Legal Entity and Non Legal Entity. These two terms will help you to lay your hands on the right vehicle.

Entity means a body, a legal entity means legal body, as we humans are natural body created by nature, few company structures are created by law giving them a special status of legal entity. Structures like OPC, LLP, Section 8 NGO are corporate entities and enjoy a special treatment and protection in law.

KEY TAKEAWAY:

You must choose corporate entities like Pvt. Ltd., OPC or LLP for your business, as in last few years Indian Government is implementing initiatives that prefer corporate entities over normal partnerships and proprietorship firms (these are also termed as Non-Company). Market experts also see introduction of LLP and OPC is to actually replace and slowly stop the registration of partnerships and proprietorship from India.

REASONS WHY YOU MUST REGISTER YOUR COMPANY?

Let’s see how does company formats like Private limited and LLP put you at an advantageous position.

DOCUMENTS REQUIRED FOR COMPANY REGISTRATION

REGISTERED OFFICE ADDRESS PROOF DOCUMENTS

STEPS INVOLVED IN REGISTERING A COMPANY

MCA Company Name Search Process

Company Name Search means before starting your business, you must know that the name of your company is not similar to any existing company or trademark. Also your business name must comply with MCA naming guidelines.

Detailed Online name search on MCA website will help you to apply for a legally proper name, so that there is no legal issues in going forward.

Myths & Truths around registering a Company

For registering as Pvt. Ltd. firm, you need certain level of Turn over or Sales.

This is not true; a Private limited startup is one of the modes of doing business, which means it can be started from the scratch. For that matter even after incorporating a private limited there is no obligation that the venture must have sales or turnover.

Directors of the corporation must have shares

This is not true. Shareholders are the owners of the Company, who invest money while Directors are managers of the enterprise for looking after the operations of the business. In startup companies mostly directors and shareholders are the same person. However it is not necessary that every director must hold shares.

Only human beings can be shareholders or owners of the Company

Again this is not the truth. As in the eyes of law a company is defined as an “artificial person” Once Incorporated Company can invest into the shares of another corporation. This means human beings as well as incorporated companies can invest into Private limited business.

Tax Rates for Private Limited Company is high

This may be partially true. The tax rate for a organization is higher than that of Individual trader or Partnership firm. However, Private limited Firm allows lot of opportunities to reduce the tax amount. For a startup firm there is no relevance of Tax rates, several deductions under tax is allowed

PF, Service Tax or VAT/ GST is automatically applicable to Private Limited

This is not the reality. Provident Fund (PF), Service Tax or VAT /GST laws are similar for all types of businesses like sole proprietorship, partnership firms and companies. There are threshold limits for the applicability of these laws, like PF is applicable to all entities upon employing 20 or more employees; Service tax is applicable to entities, providing taxable services, only after crossing Rs. 10 Lac of sales, similarly VAT is applicable to trading business crossing Rs. 5 lakh or GST above 25 lakhof limit of turnover. This means registering a private limited Organization will not make any difference to the applicability of PF, Service Tax, VAT/GST or ESIC.

The Share Capital of the Company to be deposited in a Bank at the time of Incorporation

Again this is not true. The minimum capital required is abolished since 2013 in India. Even if the private limited enterprise shows share capital of Rs. 1 Lakh at the time of formation. The capital amount is shown only in the Incorporation documents and need not be deposited in a bank or elsewhere at the time of incorporation. Once the bank account of the venture is opened, this money can be deposited into said bank account and can be used for business purpose.

After Incorporation, changes in Private Limited is tough or not possible

Again this is not the reality. Private Limited venture is one of the most flexible business structures available for entrepreneurs. As soon as your business is incorporated, from the same day you can make all kinds of changes and modification in its capital, shareholding, directorship, business scope, office address and literally you can change everything of a enterprise.

Commercial Office Space is required for Incorporating a Company

The Reality is that you can show your own residential or rented home address as the registered office address of the firm. This office address can be changed at any time after incorporation of the company.

Private Limited Registration to be renewed every year

This is a crazy thing, there is no such renewal required. Once the Company is incorporated it will remain for eternity until company is legally closed by the owners. There is no renewal, or registration or any fees to be paid to any government or private agency. The only requirement is that Company has to file yearly returns with the Income Tax department and ROC (Registrar of Companies).

Single person cannot hold 100% shares in a Pvt Ltd company

This is not true. After April 2014, a single person can register a one-person company (OPC) which is a private limited business and can Own 100% shares of the company. OPC can also appoint many directors without issuing any shares to them.

Registrar of Companies in India

The Registrar of Companies also known as ROC in India are responsible for registering companies like private limited, one person companies, limited liability partnerships (LLP), public limited and Section 8 Companies in India.ROC offices issue Incorporation certificates, maintain register of companies and LLPs, provide list of companies, list of directors and Company data search facilities on payment of prescribed fee.

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