Selecting a right type of company:
When you start a business its important to register it legally. Choosing a right type of company is very important. It helps you achieve the desired targets. A lot of thought has to be put in when selecting a structure like cost of registration, cost of compliances, tax rates etc.
Here is the difference between a Pvt Ltd, LLP, OPC and Proprietorship:
- Private Limited Company (PLC)
Minimum 2 directors and shareholders are required to register a Pvt Ltd Company. It is ideal for fast growing companies and entrepreneurs planning to raise funds. Compliance cost is higher than LLP. If you want to raise funds then private limited is the only option.
- Limited Liability Partnership ( LLP)
LLP registration is best suited for family owned businesses. Raising funds is difficult in LLP. LLP cannot be converted in Private Limited company.
- One Person Company ( OPC)
Only 1 founder/ owner is required to form a OPC. Investment cannot be raised in OPC. To convert a OPC in Pvt Ltd there are certain conditions.
Proprietorship is best suited if you are just experimenting with your idea. It is the simplest and cheapest way to start a business. You cannot have partners in proprietorship.
- Public Limited Company ( PPC)
It is ideal for big corporations and companies planning to list on stock exchange. The cost of compliance is very high and minimum 7 shareholders/owners are required to register a Public Limited Company.
What is Private Limited Company?
Private Limited Company is most suited for fast growing companies wanting to raise funds. It is the most credible structure of doing a business in India. Private Limited company can be registered in 10 working days. Once registered the government issues a certificate of incorporation which is the basic document. After registration you just need to open a bank account, deposit the share capital and commence your business. The private limited company can be registered any where in India and it can do business anywhere irrespective of its registered address. The basic requirements are as follows:
- Minimum 2 directors (can be relatives)
- 2 Shareholders (can be same as directors)
- There is no minimum capital required
We can assist you with company registration anywhere in India including Pune, Mumbai, Bangalore, Hyderabad and Chennai. Private Limited Company registration in Bangalore will be most suitable for a startup engaged in IT, artificial intelligence etc. Bangalore is known to be silicon valley of India. The best human resources for IT can be found in Bangalore.
Private Limited Company registration in Mumbai is most suitable for startups engaged in Fintech. Most of the corporate offices of banks are based out of Mumbai.
Gurgaon / Gurugram is now home to largest number of startups in India. setting up a private limited in Gurgaon also makes sense due to its location and availability of skilled manpower.
Steps to register a private limited company in India
In 2018, the MCA changed the process of incorporating a private limited company.
1. Name Approval
The latest Reserve Unique Name (RUN) allows to apply for the name of the company. 2 options can be applied at once. Another of the MCA allows to check the details of existing companies
Name approval can also be sought while filing the SPICe (INC-32) form. This process requires the certification (apostille) of the following documents:
2. Create a digital signature certificate
A (DSC) as the name suggests is the digital signature. Its a completely online process and takes 1 day to obtain a signature from Certifying Authorities (CAs).
All directors and shareholders of the company should obtain a DSC, which is valid for a maximum of two years.
3. Director Identification Number (DIN)
Every director of a company must obtain an eight digit DIN. An individual is allowed to possess only one DIN, even if he/she is a director in multiple entities.
DIN is valid for lifetime and cannot be changed. Since 2019 everyone holding a DIN has to file DIR 3 KYC every year to keep the DIN active.
Since 2018, a maximum of three proposed directors may apply for DINs by submitting the y (SPICe form INC-32) online.
4. SPICe Form (Spice Part B, Agile, E MOA and E AOA)
Spice Form is an extremely detailed online form covering all the details like director and shareholder details, address of the proposed company, object of the company etc.
It requires 11 documents to be attached at the time of filing.
provides the electronic format of the Memorandum of Association which outlines the charter of a company.
provides the electronic format wherein applicants input their Articles of Association (internal regulations of the company).
Upon approval, the Registrar of Companies (RoC) assigns a company with a 21 digit Corporate Identity Number (CIN).