0186 How to register a company

How to Register a Company in India?

How to Form a Business in India: A Step-by-Step Guide

To start and manage a successful business, you must be legally compliant with all company incorporation formalities. Let’s have a look at how to lawfully register a company in India.

With a potential consumer base of over 1.35 billion as of 2018, India has always been a place of opportunity for businesses in various sectors. As of June 2018, there were around 11,89,826 active firms in India. India has also been removing antiquated and out-of-date laws, making it easier to do business with One-Day, One form Company Incorporation and an uncomplicated Company formation method for registering company in India. Starting a business in India can always be a rewarding venture if you perform your marketing research well before starting you business. But, before you can begin any business activity, you must formally incorporate your company to avoid any operational difficulties.

Let’s go over how to form a company in India, including the stages, documentation, and everything in between.

This is one of the most basic and foundational processes in registering a company anywhere in the world. Choosing your firm’s business structure will fundamentally decide the course your company takes and how it manages operations for the rest of its life. As a result, deciding on the best business structure for your company’s goals and desires becomes critical. There are numerous sorts of business structures in India, making it difficult to choose one. As a result, we’ll take a quick look at all of the business structures to assist you in selecting the finest one. how to register a firm?

Types of Business Structures

Company TypesMinimum ShareholdersSuitable forTax AdvantagesLegal Compliance
Limited Liability Partnerships2Businesses with low investment needs and Businesses offering ServicesDepreciation BenefitsTax Returns like GST Return and ROC returns to be filed
One Person Company1Solo owners with the intention of restricting their liabilitiesStartup India Higher benefits on benefits allow for tax holiday in the first 3 years of operation. No tax on dividend distributionBusiness Returns. ROC Compliances are limited
Private Limited Company2High turnover businessesTax holiday in the first years of operation in accordance with Startup India higher benefitsBusiness and Tax Returns, ROC Compliances  have to be filed and Statutory Audit is mandatory
Public Limited Company2High-risk, high-reward based high turnover businessesLower and Reduced tax advantages as compared to othersBusiness tax returns to be filed. Mandatory statutory audits to be performed

Several types of business structures exist in India that operate outside the purview of company legislation and hence do not require registration. However, getting these registered is always suggested to ease operations and day-to-day functions. The following are the business structures:

Sole Proprietorship

Hindu Undivided Family (HUF)

<a href="https://setupfilings.com/learn/partners-responsibilities-and-rights-in-a-partnership-firm/" title="Partners’ Responsibilities and Rights in a Partnership Firm“>Partnership Firms

Business Structure: Importance

It cannot be emphasized how important it is to choose the right business structure for your company’s needs. One of the factors that will influence your company’s success is selecting the appropriate business structure. It is vital to choose the appropriate business structure because the organization’s income tax returns and legal compliances are depending on its structure.

For eg. Sole Proprietors only have to File their GST returns and their income tax returns in stark contrast to this, a private company has to file GST returns, Income Tax Returns, have to get their audits done along with various other legal compliances.

In contrast, while businesses may have more compliances, having a proper and recognized legal structure behind your organization makes it appear more investment-friendly. An investor is less inclined to invest in a single trader or sole proprietor than in a business idea supported by a solid legal structure (Private Company, Public company, LLP etc).

Considerations for Choosing a Business Structure

These are some of the most important considerations for any prospective entrepreneur when deciding what type of firm or business to start.

Number of Shareholders/Partners

Single business owners who are in charge of/own all of the company’s investments should form a One Person Corporation. However, ambitious entrepreneurs with two or more proposed owners/directors who want to attract further capital should form an LLP or a Public / Private Limited Company.

Early business investments

If business owners want to spend as little money as possible on their hands, they might consider forming a sole proprietorship, HUF (Hindu United Family), or a partnership. But, if you are convinced that you will be able to recoup your investment in terms of startup and compliance costs, Choose between a one-person company and a limited company (private/public/LLP). how to incorporate a firm


Several types of company formations, such as HUFs, <a href="https://setupfilings.com/learn/one-person-company-vs-sole-proprietorship/" title="Differences Sole Proprietorship vs. One Person Business“>sole proprietorships, and partnerships, have what is known as limitless liability. What exactly does this imply? It basically means that if a loan is not repaid on time, the money will be retrieved.

Rates of Income Tax

The proprietorship and the HUF are business formations that fall under the usual income tax slabs. Businesses such as LLPs, Public Companies, and Private Corporations are subject to a 30% income tax. The business income is combined with other sources of income for a lone proprietor.

Getting Investors

When attempting to attract an investor to raise funds for your firm, having an unregistered business structure can be a barrier to overcome. Legally established business forms such as OPC, PLC, Public Corporation, LLP, and so on are considerably more likely to receive an investor/investor firm’s vote of confidence.


How long does it take to establish a private limited corporation in India?

On average, registration takes 7-12 days to complete, and two different permissions (Name Approval & Final Approval) are necessary from government organizations. However, this is depending on the workload of the Central Registration Centre (CRC), MCA.

Is it necessary for me to be physically present during this process?

No, company formation is entirely done online. All essential documents are filed electronically, so you do not need to be present in person. All you’d have to do is send us scanned copies of all the necessary paperwork and forms.

Who is eligible to join a Private Limited Company?

Any individual or organization, including foreigners/NRI, can become a member/shareholder of a private limited business. Nonetheless, such a person must be at least 18 years old and have a valid PAN card.

How many directors are needed to start a Private Limited Company?

A Private Limited Corporation must have at least two directors, at least one of whom must be a permanent resident of India.

Is it possible for a private limited business to survive indefinitely?

Absolutely, according to the law, a private limited company must have perpetual succession. Yet, it is important to highlight that statutory annual compliances must be done by the organization. In the event of noncompliance, the Registrar of Companies (ROC) is required to strike out the company’s name.

Why is a Private Limited Corporation referred to as a distinct legal entity?

A private limited company is a legal entity that is recognized by the Act as a distinct person. It is recognized as a separate individual who can own property and incur debts or creditors. Members, directors, and shareholders of a corporation have no accountability to the firm’s creditors if the company is unable to pay its debts.

How many names may I submit to MCA for name reservation?

Originally, you can submit two names for name reservation to MCA, with one of them being authorized based on availability. If the first two names are rejected, there is one more option to re-submit fresh two names. As a result, four names can be used in a single application.

What is the required minimum capital to establish a Private Limited Company?

There is no such thing as a minimum capital requirement. However, if there are two shareholders, a company must be established with a minimum capital of Rs. 02.00.

Can I start a Private Limited Corporation as the sole director and shareholder?

No, a Private Limited Corporation must be formed with at least two directors/shareholders. A single person, on the other hand, can form a One Person Company (OPC).

Can a salaried or employed person become a director of a Private Limited Company?

Absolutely, a salaried or employed person can become a director of a private limited company, LLP, or OPC. Nonetheless, one must review the employment agreement to see if such conditions are permitted. In many circumstances, companies are quite fine with the idea that their employee is a director in another company. Nonetheless, if being a director of a firm is restricted, one can hold shares in a company and shareholder alternatively.

Can a person working for a PSU, a government employee, or a professional practicing his field be a shareholder in a private limited company?

Yes, a person in employment, a government employee, or a professional in practice may be a shareholder in a private limited incorporation. But, one must determine whether there are any restrictions imposed by the governing body, authority, or ministry.

What exactly is the distinction between a director and a shareholder?

A shareholder or member is a corporate owner who owns specific shares in the firm and has his name put in the company’s register of members. A Director, on the other hand, is someone who oversees the day-to-day operations of a company. A director and a shareholder may or may not bethe similar person

What exactly is a Memorandum?
The <a href="https://setupfilings.com/learn/memorandum-of-association-moa/" title="MOA (Memorandum of Association) Format“>Memorandum of Association (MoA) is the bedrock upon which all businesses are built. It is the fundamental document required for the formation of a business. It should be prepared before filing for business registration and signed by the firm’s founders.

 What are the <a href="https://setupfilings.com/learn/article-of-association-aoa/" title="Articles of Association (AOA) Specifications“>articles of Association?
They are a company’s constitution and governing document, and they incorporate the company’s regulations in a variety of areas, including: shares and dividends; proceedings of directors; proceedings of shareholder meetings; and various administrative problems.
They may vary from very basic and standard paperwork to quite extensive and customised documents dealing with various forms of share rights and decision making procedures.

It is a public document that anybody may see through Companies House.

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