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Company Registration

About Company Registration

Picking the right company structure for your business is as important as any other business-related activity. The right business structure will allow your enterprise to operate efficiently and meet your required business targets. In India, every business must register themselves as part of the mandatory legal compliance. Before we learn how to register a company, let’s try and understand the types of business structures in India.

What are the types of business structures in India?

1. One Person Company (OPC)

Recently introduced in the year 2013, an OPC is the best way to start a company if there exists only one promoter or owner. It enables a sole-proprietor to carry on his work and still be part of the corporate framework.

2. Limited Liability Partnership (LLP)

A separate legal entity, in an LLP the liabilities of partners are only limited only to their agreed contribution.

3. Private Limited Company (PLC)

A company in the eyes of the law is regarded as a separate legal entity from its founders It has shareholders (stakeholders) and directors (company officers). Each individual is regarded as an employee of the company.

4. Public Limited Company (PLC)

A PLC is a voluntary association of members which is incorporated under company law. It has a separate legal existence and the liability of its members are limited to shares they hold.

You can choose what business structure suits your business needs best and accordingly register your business.

Here is a comparative list of the popular business structures in India.

What is the Process of Selecting the Company Name?

The company name should be unique and easy to remember. The company name should be attractive. Also, please check company name from Registrar of Companies' website as well check the trademark status of the proposed name of the company. In case, you find the proposed trademark is objected or opposed then avoid filing the same name.

Following factor, you should keep in mind before finalizing a company name

The name of the proposed company should have a meaning.

Check Company registration status and Trademark status.

The Name of a company must not be the name of State/Country/ District or Famous personality of India or aboard.

The name should not be too general or offensive or religious.

In case you are finding any difficulties with the company name you can keep legal name different and brand name different.

Selecting the company name please book a domain. Prefer for .com extension or .in.

Share at least 4 name choices with the CA.

How to choose a business structure while applying for company registration in India?

Let’s take a look at some important questions every entrepreneur must ask himself before he/she finally decide upon a business structure.

If you are a single person who owns the entire initial investment required for the business, a One Person Company would be ideal for you. On the other hand, if your business has two or more owners and is actively seeking an investment from other parties a Limited Liability Partnership (LLP) or Private Limited Company would suit you best.
The answer to that question is – Yes if you want to spend less initially, it would be wise to go in for a Sole Proprietor, or a HUF or a Partnership. But, if you are sure that you will be able to recover the setup and compliance costs, you can opt for a One Person Company, LLP or a Private Limited Company
Business structures like sole proprietor, HUF, and partnership firm have unlimited liability. This means, in case of any default in loans, the entire money will be recovered from the members or partners in profit sharing ratio. The risk to personal assets is high in these cases.
Whereas, Companies and LLPs have a limited liability clause. This means that the liability of its members is restricted to the amount of contribution made by them or the value of shares each member holds.
The income tax rates applicable to a sole proprietorship and a HUF are the normal slab rates. In case of a sole proprietorship, the business income is clubbed with the individual’s other income.
But in the case of other entities like partnership and company a tax rate of 30% is applicable.
As mentioned earlier, it is difficult to get investments when your business structure is unregistered. Entities like LLP and Private Limited Company are trusted when it comes to investment. Make sure you choose the right structure, seek the help of an expert so that you register under proper guidance.