Let’s try and understand the types of business structures available in India. Here is a list of some of them:
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.
A separate legal entity, in an LLP the liabilities of partners are only limited only to their agreed contribution.
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.
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.
|Company type||Ideal for||Tax advantages||Legal compliances|
|Limited Liability Partnership||Service-oriented businesses or businesses that have low investment needs||Benefit on depreciation||Business tax returns to be filed ROC returns to be filed|
|One Person Company||Sole owners looking to limit their liability||Tax holiday for first 3 years under Startup India Higher benefits on depreciation No tax on dividend distribution||Business returns to be filed Limited ROC compliance|
|Private Limited Company||Businesses that have a high turnover||Tax holiday for first 3 years under Startup India Higher benefits on depreciation||Business tax returns to be filed ROC returns to be filed An audit is mandatory|
|Public Limited Company||Businesses with a high turnover||Tax exemptions under||Business tax returns to be filed. Mandatory Audits|
Other forms of business structures include Sole proprietorship, Hindu Undivided Family, and Partnership firms. Please bear in mind, these structures do not come under the ambit of company law.
In India, registration of private limited company can not be done without proper proof of identity and proof of address. Proof of identification and address would be required for the incorporation of all the company’s directors and shareholders.
The organisation must have a registered office in India for online business registration in India. A recent copy of an energy bill or the property tax receipt or water bill must be sent to confirm admission to the registered office. In addition to the tenancy agreement, the maintenance bill or the sale deed or a letter from the landlord with his/her permission to use the office as the company’s registered office is accepted.
An identity and address proof of all the directors and the subscribers to the share capital must be submitted
If you intend to register a new company in India, you must submit an application to the Ministry of Corporate Affairs (MCA). You make the application online at MCA portal remotely too. For registration, you’ll need a Digital Signature Certificate(DSC), and Director Identity Number(DIN), among other things.
The Ministry of Corporate Affairs (MCA) that maintains a record of registered company names, you’ll have to access that directory and check if your company name is already registered. If the company name appears in the company Registration directory, you’ll have to choose another name. If you have already made an application, you’ll have to make another application for a different name that is previously not registered.
Yes, as per the Indian company law, a foreign national can be a director of a company registered in India. However, he must fulfil all the criteria laid down in the Act. The most important being allotment of a Director Identification Number (DIN).
Any person, including a foreign national, appointed as a Director cannot act in the capacity of a Director unless he/she gives it formally in writing. This can be done by filing Form DIR-2 within 30 days of being appointed as the director.
A combination of a sole proprietorship and a company an OPC offers the best of both worlds. Registering an OPC is easier and requires less documentation. OPC has to commit to lesser corporate formalities like conducting frequent AGMs/ EGMs, maintaining quorum, minutes, ROC filing formalities etc. An OPC is ideal for small businesses and yet can avail of all the benefits of a private limited company.
The new changes brought about by the MCA have made it easy to register companies of any nature with the government. Provided that you have all your documents in place, it can take anywhere between 10 – 15 days to register your company formally.
The entire process is completed online, so you don’t have to be present at any particular place for registration. A scanned copy of the documents must be submitted via mail. At the business address they receive the company incorporation certificate from the MCA.
Yes, in private limited, LLP or OPC private limited company a salaried person can become the director. If this calls for these conditions, one has to test the employment agreement. The employers are, in many situations, very happy with the fact that their employee is a director in another company.
A corporation is a legal entity founded under the Act, much like any individual. This is viewed like another person who may own a house, and who has debts or creditors. A company’s representatives (directors/shareholders) have no responsibility to a company’s creditors in a case firm is unable to cover the debts.
Any current partnership companies wishing to convert to an LLP must apply to Form 17 (Application and Statement for the Transfer of a Partnership to LLP. Form 17 must be submitted along with Form 2 (Incorporation Request and Statement of Subscriber).
One must first apply for a Designated Partner Identification Number (DPIN) to register an Indian LLP. You will do so by filing an eForm to obtain the DIN or DPIN. Then one will need to buy their Digital Signature Certificate and register the same on the portal. One will subsequently get the Ministry ‘s approval of the LLP term. When the name of the LLP has been accepted an LLP may be registered by filing the incorporation form.