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An overview:
For achieving your entrepreneur dream, there are various forms of doing businessby making business entities in the form of Proprietorship, Partnership, Trust, Society, LLP, etc. Proprietorship is also one of them. SoleProprietorshipdoesn’t Governed by any law and this makes to do the business in a easiest way as there are less compliances to be done by the person.As the name convey, sole proprietorship means there is a single person who is the owner as well as manager to make all the decisions related to the business. This is the reason that there are minimal chances of fraud as all the decision-making powers are in the hands of the single person
⇒ Reliability-
Every business before entering into an agreement or dealing with other persons always wants to have some legal identity proof which is issued by some authority recognized by law.
⇒ Big Project Cost and Risk Factors
Business entities which require high capital outflow, the financial institutions always prefer registered firms to lend money.
⇒ Raising money from Public
Recognized registered business easily get funding from the public or other people which is required in the starting of new business as well as expansion of existing business
A person who wants to start its business as a sole proprietor doesn’t recognize by law until it registered itself in any government recognized statue. There are many types of registration under which sole proprietor can take registration.
It gives you right to suffix the word “(OPC) Private Limited” for One Person company in their name. Unlike the Private Limited Company, government here provide an option to One Person Company in which a single person can incorporate a company by becoming its shareholder and Director. OPC also enjoys the benefit of separate legal entity. The liability of the member is limited to their share and it will not be personally liable for the loss of the company. Thus, the creditors can sue the OPC but not the member of the OPC. Certain other relaxations also provided to the OPC with respect to the Compliances like no need to prepare the Cash Flow Statement.
This is also known as Small and Medium (SME) Registration under the MSME Act. Proprietor can apply for the Udyam Registration to show the Registration proof while doing business. Further, Banks also provide loan at lower concessional rates to the persons who have taken the Udyam Registration.
Person can take the voluntary registration under the GST Acteven if their turnover doesn’t exceed the specified limits. Today most of the businesses are registered under GST and they also prefer to deal with the businesses which are registered under the GST for taking the Input Tax Credit. Hence it will boost your business and creates good self-impression.
Person who are looking for registration as a sole proprietor can also take registration under Shop and Establishment Act. It is generally need to be applied by all the persons who are owned shop or establish a commercial establishment and the same will be issued by the authority depending on the nature of business.
However, out of all the registrations explained above the best one is to get registered as a One Person Company. Anyone can check the existence of the company on the site of Ministry of Corporate Affairs. It is recognized as a separate legal entity recognized by the statue.Being separate legal entity gives looks of a corporate domain, bank prefers to give lend money to the company rather than the proprietary firms.One person Company also enjoys other several privileges and exemptions under the Companies Act. A proprietor always has unlimited liability however the same is not the case with the One Person Company. The liability of the member is limited if the proprietor started business by making One Person Company.Thereby we shall proceed further to explain the benefits and whole process of formation of One Person Company.
Limited Liability
Generally in other business if your business fails to pay the dues to your creditors, banks, etc then business owners are liable to pay it from their personal assets but the same is not in case of the company. In case of the company if company fails to pay its dues, then party cannot demand it from the personal assets of the shareholders. Shareholders are liable for only amount they invested at the start of the business. Loss of remaining amount is only suffered by the person who paid the amount to the company
Perpetual Succession-
Being a separate legal entity, OPC enjoys the benefit of perpetual succession. While incorporating the OPC, nominee shall be selected by the person who will succeed the business after the death of the member.
Centrally registered
Instead ofstate registration, it is registered with the central government due to which your company is worldwide recognizable, and its data and registration can even be verified from the Government site which make it more trustworthy and reliable.
Management and Reliability
Any person can verify the registration of the company from the website of the Government and the name of the directors which build the confidence in the customers and make the entity more reliable.
Loan availability
There are various criteria of the banks which are checked while sanctioning of the loan and the same is also applicable in the case of the company. But company is preferred over other forms of business as it is registered by Central Government and banks even also provides collateral free loans to the companies..
Unique name
As everyone found in India that a same business name is used by various entities which make it difficult for entity to create a brand of their business, expand their business nationwide or worldwide and make difficult for the customer to identify the original entity and other person take its benefit by starting the business with the same name. This issue is tackled by the Company form of business. Once a name registered for the company, it cannot be registered by any other person or entity. Hence businesses enjoy the unique name and avoid the chances of delicacy.
Among all, the first step involved for the process of company incorporation is ascertaining the availability of name. A company is identified through its name it registered on the Ministry of Corporate Affairs. Hence choosing an appropriate name is the important and crucial thing.
For the same, an application will be submitted for the reservation of name to the Ministry of Corporate Affairsby login to the sitehttps://www.mca.gov.in/mcafoportal/login.do and preference wise 2 names along with the business objective can be provided. Once the name gets approved, it’s reserved for 20 days within which applicant needs to complete all the remaining process for the incorporation of the Company.
Stakeholders shall ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014.Points to be considered while suggesting the name:
-Check Trademark for your proposed name on the site https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx
– Check domain for your proposed name on the site https://www.registry.in/index
-Check the availability of Company Name on the site https://www.mca.gov.in/mcafoportal/viewCompanyMasterData.do
Therefore, choosing an appropriate name which does not prohibit any law will be the most important thing.
There is also another way to finalize the name of company and its incorporation in one go i.e., apply name and company incorporation together. However, if the same has been rejected by the MCA, then all the documentation will be done again
Once the name gets approved in PART A, the basic details will be automatically filled in all linked forms of PART B. There will be total 4 linked forms which will be generated such as AGILE-PRO, Spice+ MOA, Spice + AOA and INC-9. These linked forms will be filled up with the necessary details like capital subscription, name of shareholders and directors, percentage of holding among the shareholders, Interest of shareholders in other entities, etc.
For completion of the Part B, many other details and documents will be required which is discussed as below:
For the E-filing of all the forms, Digital Signature is a mandatory requirement. Digital Signature is in form of digital key containing all the information about the registered signatory like name, address, Contact No, Email ID and the authority detail which has provided the certificate. All the forms will signed digitally by the authorized signatory by proving its identity through the Digital Signature Certificates.
Director Identification Number is a unique identification number of 8 digits for the directors of a Registered Company.Every director will be provided a unique number with which he will be identified by the MCA. To become a director, one shall apply for getting the DIN from the MCA.To applying DIN, the applicant has to make an application in e-Form DIR-3 and shall follow the below mentioned process
This form is for GSTIN, Employees Provident Fund Organization registration, Profession Tax Registration, Opening of Bank Accounts, Shops and Establishment registration.
It is mandatory to register for ESIC, EPFO, Professional Tax (for Maharashtra) and bank account opening to obtain AGILE-PRO via e-form, However, GSTIN Registration is optional for the applicants.
MOA is a document which contains all the fundamental information about the company, the objectives of the company in brief, the share capital, type of Shares whether equity or preference and its shareholders details, details of allocation of shares among the shareholders along with their name, address and occupation, etc. Company can perform and undertake only those activities that are mentioned in the objectives of Memorandum of Association beyond which the company cannot undertake any other objective but the Memorandum of Association (MOA) can be amended with the approval of the shareholders.
As per Section 4 of the Companies Act, 2013, Companies shall form MOA as specified in Tables A to E of Schedule -I of the Act. Below is the list of tables with their meaning:
Table A: Company Limited by shares
Table B: Company limited by guarantee and not having a share capital
Table C: Company limited by guarantee and having a share capital
Table D: Unlimited Company and not having share capital
Table E: Unlimited Company and having share capital
Hence Company shall adopt an appropriate table applicable to it as there are various forms of tables for different companies.
AOA defines the rules and regulations that govern the internal management of the company for achieving its objectives.
Various forms in Tables F to J for different companies have been mentioned under Schedule I of the Companies Act 2013 and AOA must be in the respective form.
Table A: Company Limited by shares
Table B: Company limited by guarantee and having a share capital
Table C: Company limited by guarantee and not having a share capital
Table D: Unlimited Company and having share capital
Table E: Unlimited Company and not having share capital
Declaration shall be given by the subscribers and directors in the form INC-9 that:
Once all the above documents and details are ready, then the application for the incorporation of the company can be made via e-form Spice accompanied by Spice MOA and Spice AOA with the registrar under whose jurisdiction the address of the company is located. All these e-forms need to be affixed by the Digital Signatures of the respective persons.
The Registrar of Companies will grant a Certification of Incorporation along with the Copy of PAN, TAN, EPF, ESIC which will be used as for the identity of the company existence.
Once the company gets incorporated then there are many compliances which need to be performed by the company
The Company within thirty days of its incorporation shall furnish to the Registrar of Company regarding verification of its registered office by filing the e-form INC-22.
INC-22 shall be downloaded from the Ministry of Corporate Affairs site and any of the following document will be attached with this form:
Every Company incorporated shall within 180 days of its incorporation shall file the declaration for the Commencement of the Business with the Registrar of Company. It is the declaration regarding that all the subscribers to the MOA have deposited the total value of the shares agreed to be taken by them in the Company Bank Account. Proof for the same shall be attached while filing the form INC-20A. Bank Statement shall be used as the evidence for the same.
COMPLIANCESPRO has a separate team which is expert in completing this complex process very easily and helps you to get the company registered within 3 daysonly in a very reasonable price.
