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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. Company is also one of them. Company is a separate legal entity having its own identity and recognized by the law. These concerns can be identified with the suffix “Private Limited” or “Inc” in their names. If you are registered as a company then you get the legal right to do business.“Company” form of business is widely chosen among the others due to its worldwide presence, having big ambitions, unique name, limited liability, greater possibility for expansion, to gain trust of their customers due to its legal status, etc.
Existence will remain Forever
One of the unique features of the company registration is that directors or shareholders may come and go but the existence of the company will remain forever until and unless it is closed as per Companies Act, 2013.
Raising money from Public
Private companies can raise capital by issue of debentures, Private placement etc. and Limited companies can raise large amount of capital from public by issue of shares and deposits.013.
Recognition as a Separate Legal Entity
Registering your business as a company, helps your organization to explore the markets and expand the business in the corporate world as the companies who are legally recognized by the statue are more preferred.13.
Establishing Reputation
Registering your business as a company, helps your organization to explore the markets and expand the business in the corporate world as the companies who are legally recognized by the statue are more preferred.
Big Project Cost and Risk Factors
Business entities which require high capital outflow, the financial institutions always prefer registered companies having separate legal entity.
Limited Liability
Unlike the proprietorship concern or partnership firm, the members and directors of the company have no personal liability towards any unfortunate event like loss or failure in the business. Thereby protecting the personal assets of the directors, members and shareholders.
Startup Benefits
Startup is the scheme of the government to give incentives and support the new businesses. Government gives the 3 years income tax exemption to the entity registered under the startup. There are other various benefits of the startup which are explained in detail on Startup page. But not every form of business can register itself in the startup. Only Company and LLP are the forms of business which can register and take the benefits of the startups
There are 3 types of the company- Private Limited, One Person Company and Public Limited Company. It is registered with Central Government.
It gives you right to suffix the word “Private Limited” for Private Limited Company in their name. There shall be at least two shareholders and maximum can be up to 200 shareholders. Minimum number of directors shall be two and maximum can be up to 15 directors. As their accounts are more transparent, Private Limited company is considered less risky than the sole traders and proprietorships and hence they have easier and greater access to the borrowings. Board of Directors are appointed to run the business of the Private limited company which may or may not include the shareholders. Its liability is limited i.e., it does not require owners to use their belongings to pay off the company debts
It gives you right to suffix the word “Limited” for Public Limited company in their name. There shall be at least seven members but there is no limit in respect to the maximum members. These companies are listed on the stock exchange where its share/stocks are traded publicly and financial statements regarding the income of company must be made available to the general public. These companies offer shares in the business to the general public and there is no restriction as to who can purchase shares in the business.
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.
All types of company have their own benefits; however, the Private limited company is widely preferred among the others due to its various benefits and amenities provided and enjoyed by the private limited companies in terms of easy-to-get funds from various venture capitals, angle investments, NRI Investments. Further certain business activities are restricted in the OPC like investment in securities, non-banking financial activities however the same can be done by the private limited company by taking the approval of the concerned authority.
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
Management and ownership separation
It is a uniquefeature which is available in company only that management and ownership both are the separate. Sometimes business owners only invest and do not manage it or after a period they want to continue to invest in their business and enjoy the profits but handover the management to others like employees, managing partners etc. But issue arises to them is that they continue to liable for the wrongdoings or acts of the person managing the business. But the same is not in the case of the company. In case of the company business owners are not liable at all for the acts of others. The person who is at the fault will be solely responsible for his acts.
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..
Foreign Direct Investment (FDI)and Domestic Investment (DI) Allowed
Not all the businesses are allowed to take FDI or DI. But company is allowed to take FDI and DI and invest it in the business which make it easier for the businesses to grow and expand their business easily by getting the investment.
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.
Startup Benefits
Startup is the scheme of the government to give incentives and support the new businesses. Government gives the 3 years income tax exemption to the entity registered under the startup. Reduced the government fee for applying trademark, patent, copyright, etc. Government also made a seed fund specifically for the startups to provide collateral free loans and subsidies. But not every form of business can register itself in the startup. Only Company and LLPare the forms of business which can register and take the benefits of the startups.
Transferability
It is a very important feature of company. When other forms of business are transferred or a partner is introduced in the firm then it requires to surrender the existing registrations including GST, PAN, TAN, EPF, ESI, etc and it will finish the track record of the business but in case of company if the owners want to transfer its business or want to introduce the partner/shareholder, there will be no change in the constitution and no need to surrender existing registrations and apply fresh registrations. It maintains the track record of the company and increases the Goodwill of the company.
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.
