Registration Types for Companies in India

Introduction

Launching a new business may be a satisfying experience if you’ve thought of everything. Choosing the proper business registration is the first step in building a successful company.

A wide variety of business registrations are available in India’s corporate world, each with its own rules, advantages, and disadvantages. As a result, you should carefully consider all the registrations until you find the one that works best for your company.

Sole Proprietorship 

A sole proprietorship is a legal structure in which one individual or group acts as manager of the firm. As one unit, we handle the business and its operator. Similarly, the owner or operator is liable for all earnings and obligations.

Because the names on the sole proprietorship registration are also on the GST registration, accounting, and income tax returns, they can be held personally or jointly liable in cases of business wrongdoing. The owner assumes complete responsibility for all risks and rewards in a nearly universal business structure with a single proprietorship. 

One-Man or Person Company

When registering a one-person business, just that person may serve as a director. So, this person will double as both a member and a shareholder in addition to serving as the director.

A sole proprietorship is an analogy that can be made. Registering a one-person business can mitigate the shareholders’ liabilities and responsibilities.

In a one-person company, the director and member are the same individual. The operations are overseen by a single person, who is also held personally accountable for all work and personal responsibilities by the owner. 

Private Limited Company Registration

The Companies Act of 2013 defines a private limited company as one that has filed its paperwork. These businesses avoid the stock exchanges by engaging in private share trading. The general public is also unable to subscribe to their shares. 

In private limited companies, the maximum amount a shareholder can be sued for is the amount of their unpaid subscription capital. For this reason, private limited company registration is a popular choice among companies in India. 

Partnerships Organizations 

It is possible to form a partnership and engage in commercial activity with two or more people who have previously agreed upon their respective roles and the distribution of profits.

A Partnership Deed, a legally enforceable document, must register a partnership firm. The amount of shares owned and obligations, commitments, and duties can be specified during the company registration process.

A Limited Liability Partnership Company

Limited Liability Partnership is abbreviated as LLP. Registering an LLP is very much like registering a partnership firm. Limited responsibility is an advantage, however. To put it plainly, your assets are less vulnerable to the LLP firm’s success. Your investments will thus be secure.

It is another name for a partnership’s formal business structure. One partner cannot be held responsible for the mistakes of another partner since the partners are held accountable according to their original capital investment.

Section 8 Company Registration

Limited corporations may be formed as non-profit organizations by individuals or groups according to the rules laid out in Section 8 of the Companies Act, 2013. These companies’ principal goals rather than profit-making are the arts, commerce, education, sports, research, social welfare, religion, charity, and environmental conservation. 

Promoting the objects specified above must account for a section 8 company’s profits, donations, and grants. Forming the corporation into a distinct legal entity and running it independently is possible. Donors to these companies are eligible for tax breaks under the Income Tax Act’s Sections 12A and 80G.

Public Limited Company Registration

There is no difference between forming a public limited business and a private limited company. There is only one difference: the ability to trade the company’s shares on the stock exchange. 

Because of this, members can transfer shares to one another. Expanding the business or raising capital will not be an issue moving forward. The other advantages include restricted liability, limitless development potential, and stock exchange listing, which makes shareholders part-owners of a corporation. 

The applicant entity must apply for the ROC, also known as the Registrar of Company, to establish such a company.

Summary

The first step in starting a successful business is deciding on the proper legal structure. It specifies the level of compliance you are required to carry, the tax implications you will manage, and the degree to which your business journey will be streamlined.

For that reason, you must carefully consider each structure and select the one that meets your needs and does not impede your progress. 

If you require assistance with any other legal matter, contact Lawgical Adda. You may seek the revival of a Struck company, relief for directors who have been disqualified, or other legal issues.

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