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Company Registration Process in India: Explained

In India, after properly following the company registration process in accordance with the terms of the Companies Act 2013 or any applicable prior Companies Act, a company is said to have been established. Any company must complete this first stage of formation before it may conduct business. Several crucial choices must be made throughout the incorporation process, such as deciding whether to classify the business as private or public, declaring its goals, figuring out how much money to invest initially, and handling a number of other crucial issues.

Section 7 of the Companies Act of 2013 lists the necessary necessary papers needed to incorporate a company in India. The Registrar of Companies must receive the required necessary papers and application for incorporation. After receiving these, they will look into whether the required paper works has been appropriately filed. The company's memorandum of organization and other relevant papers are retained and registered by the Registrar after they are satisfied that these conditions have been met. A Certificate of Incorporation is then issued by the Registrar of Companies, acting as the formal "certificate of incorporation" for the business. The Registrar also issues a corporate identity number to the company, which gives it the status of a separate legal entity in addition to this certificate.

Let us understand the type of business structures available in India. In order to start a new company, it is important to select the type of company as per the needs of the business.

What are the types of business structures in India?

For every new company or startup, it is important to select the best company structure among the different types of business structures in India to get the best results that can meet the business needs and requirements.

Proprietorship Firm

A sole proprietorship firm can be founded and run by one person. The company is handled by only one person, making it perfect for small business owners with little capital. The sole owner will have total control over the company and will be responsible for all business losses in addition to enjoying the gains.

Partnership Firm

A partnership is formed, and a partnership firm is established by two or more people. The revenues made by the company are divided equally among the partners. They will also be responsible for the company's losses. The Partnership Act of 1932 governs partnership firms. It is perfect for low-investment small firms managed by two or more people.

One Person Company (OPC)

A one-person company, which was just recently established in 2013, is the ideal business structure to establish if there is just one promoter or owner. It permits a single entrepreneur to continue operating while being a member of the corporate structure. According to the Companies Act 2013, one-person company registration takes place. It is perfect for small companies looking to raise money.

Limited Liability Partnership (LLP)

A Limited Liability Partnership is a distinct legal entity in which a partner's liability is restricted to the amount they have mutually agreed upon. As per the Limited Liability Partnership Act of 2008, the LLP registration takes place with the Registrar of Companies (ROC). It possesses characteristics of both the corporation and the partnership firm. For companies founded by partners who desire limited responsibility, it is perfect. An LLP registration process is less complex than other business structures.

Private Limited Company (PLC)

From a legal perspective, a Private Limited Company is considered to be an independent legal body different from its founders or members. The company's directors manage the business's operations. Stakeholders, or shareholders, contribute to and own a portion of the business. A Private limited company in India is registered with the ROC in accordance with the Companies Act of 2013. You can register a private limited company if your business size is medium.

Public Limited Company

According to the Companies Act of 2013, a company with seven or more members is referred to as a public limited company. The company's affairs fall within the directors' purview. Its members' liability is capped by the shares they own, and it has its own legal existence. For medium-sized to large enterprises looking to generate money from the general public, it is perfect.

Nidhi Company

Nidhi Companies are Section 8 companies. These are the non-profit organizations registered under the Companies Act of 2023. It can be registered as either a private limited or public limited company.

You can select the ideal company structure for your business as per your needs and requirements.

Benefits of Company Incorporation in India

There are several benefits to company incorporation in India. Therefore, register your company with Corpbiz and avail the following benefits:

Separate Legal Entity

Every company registered is seen as an artificial person with its own separate legal personality that is completely different from its members. A business can be sued and sued in its own name, hold assets in its name, and incur liabilities.

Limited Liability of Members

Members of a registered company have limited liability, which is restricted to the face value of the shares they possess.

This implies that if the business has debt, the member's obligation to pay it back only covers the value of the shares they own; their personal assets are exempt.

Perpetual Succession

A corporation may continue to exist indefinitely even after its members go because it has a unique legal personality that is distinct from them. After incorporation of the company, a business will continue until it is wound up, regardless of passing away, becoming insane, becoming insolvent, or retiring the initial directors, shareholders, or members of the firm.

No Minimum Capital Required

A private company can be incorporated with no minimum paid-up capital. The capital structure of a business is adaptable and may be changed if additional funding is required. It has three options for raising money: venture capitalists, angel investors, and debentures.

Exemptions for some Companies

Companies that operate for philanthropic purposes are granted certain exemptions by the Central Government, contingent upon the nature of their business model. When NGOs and other non-profit organizations register as Section 8 corporations, they are eligible for a number of tax exemptions and benefits.

Increased Credibility in the Market

A business that has been properly incorporated under Ministry of Corporate Affairs regulations has more credibility in the marketplace because it guarantees that the entity has adhered to and will continue to adhere to certain compliances, making it more reliable than other companies. Moreover, the MCA website provides rapid access to fundamental corporate information for vendors, suppliers, investors, and other companies. This strengthens the goodwill of the existing company among organizations wishing to do business with it and increases consumer confidence in the brand name.

Why is selecting the right business structure important?

Selecting the right business structure is important for many reasons. For example, your income tax returns will be impacted by the business structure you select, so it is crucial to make an informed decision. Keep in mind that different business structures require different company registration and compliance. A sole proprietor, for instance, simply has to file an income tax return. However, a company must submit annual reports to the Registrar of Companies in addition to income tax filings.

An annual audit of a company's books of accounts is required. Hiring auditors, accountants, and tax filing specialists will cost money if these legal compliances are to be followed. Therefore, while considering the registration of the company, it is crucial to choose the appropriate corporate structure. An entrepreneur has to know exactly what type of legal compliance is required for the registration.

A recognized and legitimate business structure is always preferred by investors, even though certain business forms are more investor-friendly than others. An investor could be hesitant to provide funds to a sole proprietor, for instance. On the other hand, investors will feel more confident while making an investment in a solid company idea if it is supported by a well-known legal structure (such as an LLC, Company, etc.).

How do you select the right business structure before company registration?

Before applying for company registration in India, selecting the right business structure is crucial. Therefore, entrepreneurs should be aware of the following crucial information:

  • An OPC would be appropriate if you are the only owner of the initial investment needed by the company. On the other hand, an LLP or private company registration would be the ideal option if your company has two or more owners and is actively seeking outside investment.
  • Business structures with unlimited liability, such as HUF, Partnership Firm, and Sole Proprietor, clearly mean that in case of default or loss, the amount will be incurred from the personal assets of the partners.
  • Sole Proprietor, Partnership Firm, and HUF are preferable options if you'd like to start off with less money. However, you can easily choose an LLP (established under the Limited Liability Partnership Act, 2008), Private Limited Company, or One Person Company (OPC) if you are certain that you will be able to manage the registration and compliance fees.
  • The standard slab rates for income tax are applied to sole proprietorships and HUFs. When a sole proprietorship exists, the business's revenue is combined with the owner's personal earnings. However, a 30% tax rate applies to businesses such as partnership firms and public or private companies.
  • Obtaining capital in an unregistered business structure is quite challenging. When it comes to investing, organizations like a company or an LLP are reliable. To ensure that you register in the right direction, make sure you select the right structure and get the assistance of an expert.

Requirements for Company Registration

Before incorporating as a business, the entities must fulfil the following requirements for company registration online:

Directors

A private company needs a minimum of two directors and two members for company formation, while a public company needs a minimum of three directors. In addition, one of the directors must have resided in India for a minimum of 182 weeks. A private company may have a maximum of 200 members, while there is no upper restriction on the number of shareholders in a public company.

DSC or Digital Signature Certificate

The Controller of Certification Agencies has certified a certification agency that may provide a Digital Signature Certificate (DSC) to authorized signatories such as shareholders and potential directors. During the registration procedure, DSCs are required to certify paperwork and properly submit them on the MCA website. Moreover, in order to apply for a Director Identification Number, you must have a valid DSC to sign the necessary papers that are submitted online. This process is completely online.

DIN or Director's Identification Number

A Director Identification Number, or DIN, is necessary for each director of the company. On the MCA website, Form DIR-3 must be completed in addition to the SPICe+ Form in order to apply for the DIN. The form has to be signed by a professional accountant and presented with legitimate identification and the director's address verification.

Name of the Company

When submitting an application for company registration on the MCA website, choosing a unique company name is essential. Moreover, the name of the company must not be similar to any company registered in India.

Necessary Papers required for Company Registration

Applying for registration with the Registrar of Companies on the Ministry of Corporate Affairs website requires submitting necessary papers for Company registration in addition to other legal and regulatory compliances. After carefully reviewing the application and the supporting paper works, the Registrar issues the certificate of incorporation if he is satisfied that the submissions are sufficient. The following are a few of the essential papers that must be submitted:

Necessary Papers related to the Company's proposed directors

  • The proposed directors' Aadhar and PAN cards.
  • Provide proof of prospective directors' addresses, such as utility bills, driver's licenses, passports, voter ID cards, Aadhar cards, and ration cards.
  • Identity necessary papers of directors, such as an Aadhar card, voter ID, and driver's license.
  • The suggested directors' contact information, together with their email id.
  • Passport-sized photographs of the concerned directors.

Necessary Papers related to the company

  • Proof of ownership of the office address.
  • The lease necessary paper if the registered office of the company is located on rented property.
  • If the office is located on a rented property, the landlord's No Objection Certificate is required.
  • Provide paper works of the office premises, such as utility bills.
  • The company's email address.
  • The company's draft of memorandum of association (MOA) and articles of association (AOA).
  • A necessary paper outlining the company's projected revenue and outlays for the following three years, together with the sources of revenue and spending goals.

Process of Registering a Company

The process of registering a company in India is as follows:

Digital Signature Certificate (DSC)

For incorporating a new company in India, the authorized signatories, shareholders, and potential directors must apply for a digital signature certifications from a certifying body that has been authorized by the Controller of certifying Agencies. During the Company registration process in India on the MCA website, digital signature certifications are mandatory for every Indian company.

Director Identification Number (DIN)

The suggested directors must apply for the unique director identification number by completing Form DIR-3 after receiving their digital signature certifications. The Registrar of Businesses has accepted the application and will provide the suggested directors with the unique DIN.

Name Search and Approval

We can submit the SPICe+ Form in two separate sections, as indicated below, for the approval of the company name and the PAN and TAN of the company:

Select a business name and reserve it (Part A)

The SPICe+ Form Part A must then be completed in order to reserve the company name. The SPICe+ Form must be selected by the applicant under the MCA services option to establish a company. A choice must be made about the company's kind, class, category, and subcategory. Providing information on the "primary division of industrial activity of the company" is the next stage. The Registrar of Businesses will select the most suitable name from the two alternate names submitted by the applicant. The forms must be sent with the previously listed necessary papers and the required payment.

Complete Part B of the SPICe+ Form

Following the reservation of the company name, registration involves filing a new application under SPICe+ Form Part B, which must be filed with the necessary necessary papers. This process is conducted online. The application must include information on the potential directors and shareholders of the business, as well as facts about the registered office and available resources. At this point, PAN and TAN registration applications are also accepted. The applicant must verify that the data submitted under Part B is accurate by doing a pre-scrutiny examination.

To affix the directors' or authorized signatories' DSCs, the next step is to download Part B of the Form. The SPICe+ Part B form must be filled with a few other forms. The forms AGILE PRO, SPICe+ MOA, SPICe+ AOA, URC-1, and INC-9 are related to the SPICe+ Form Part. The applicant is responsible for making sure that the SPICe+ MOA and AOA forms are completed in accordance with the guidelines listed in Schedule 1. Compile necessary papers and applications and register on the MCA portal.

Verification by the Registrar

Every submission will be examined and verified by the company registrar. The applicant will be given the chance to correct any errors and resubmit the forms if the Registrar identifies any inconsistency or mistake in the application or supporting paper works, as previously mentioned. The time taken by the Registrar to verify the application for registration can vary based on certain different factors.

Certificate of Incorporation

The Registrar will issue a certificate of incorporation for successful registration once he has examined the application, the applicant's details, and any supporting paper works and she is satisfied with the application's correctness and completeness. Together with the certificate, a distinct Corporate Identification Number, or CIN, will be created; this will serve as official paper works of the company's registration. Now you can establish your company.

How does Corpbiz help simplify the company registration process?

Corpbiz helps simplify the company registration process by preparing necessary papers, following pre and post-incorporation regulations, and adhering to many criteria, which are all part of the company registration procedure. Furthermore, it is essential to adhere to certain MCA rules in order to prevent heavy fines and late fees. Without expert support, this procedure might appear overwhelming and complex. Corpbiz offers professional assistance with the MCA website's online company registration procedure. Every step of the way, our team of professionals will help you register your business.

You can quickly establish your company with Corpbiz. Included in our company registration package are the following:

  • Searching and approving the name of your right company.
  • Obtaining DINs, or director identification numbers, for directors.
  • Filing SPICe+ form.
  • Issuing incorporation certificates with PAN and TAN.
  • Opening a current bank account.

What is the Cost of Company Registration?

The cost of company registration varies according to the type of business, where it is located, government fees, needed legal support, and other services.

It is important to speak with a legal expert or a business registration consultant at Corpbiz to obtain a precise estimate of the cost of company registration. We offer comprehensive details on the expenses related to your business structure and other particular needs.

Post Incorporation Compliance to be followed by the Company

Following its incorporation in India, the company must comply with certain compliances. A business must adhere to certain regulations to avoid fines and legal action. Following company registration, a company must adhere to the following rules:

DIN KYC: Every year, DIN KYC is necessary for those who possess a Director Identification Number, which is provided during the Company Registration Process. It confirms the phone number and email address on file with the MCA.

Commencement of Business: Within 180 days of the company's incorporation, the shareholders of the business must deposit the subscription money specified in the MOA, and the firm must open a current account with a bank. Consequently, the business's Shareholders who intend to form the business with a paid-up capital of the company of Rs. 1 lakh must deposit Rs. 1 lakh into the company's bank account and submit a copy of the bank statement to the MCA in order to obtain a Company Registration Certificate.

Income Tax Filing: All firms must file an Income tax form in ITR-6 at the end of each fiscal year. Every fiscal year's IT filing needs to be finished before the deadline. The Company's Income Tax Return cannot be digitally signed without a Director's DSC.

Appointment of the Auditor: Every Indian company must designate a practising, registered, and certified public accountant within 30 days of incorporation.

Annual Filings: All Indian-incorporated companies are required to submit a copy of their financial statements to the Ministry of Corporate Affairs at the end of each fiscal year. A company may choose to include the first MCA Annual Return in the annual filing for the subsequent financial year if it is registered between January and March. The MCA annual return consists of Form AOC-4 and Form MGT-7. A working company secretary or the directors must digitally sign each of these necessary papers.

Frequently Asked Questions on Company Registration

The cost of company registration varies according to the type of business, where it is located, government fees, needed legal support, and other services.

If all the necessary necessary papers are filed and there are no issues with the application, then forming a Company in India often takes 10 to 18 working days. The exact timing, however, might change based on a number of variables.

Go to the MCA website and enter the company's CIN. The information and important papers pertaining to the registered firm, including its registration status, will be shown on the screen if the CIN you have entered is accurate and legitimate.

Once a private limited company is registered, it must adhere to a number of compliance requirements. Opening a current bank account for a private limited company within two months of the business's establishment is one of these required compliances.

Businesses that have revenue exceeding the threshold of Rs. 40 lakh, Rs. 20 lakh, or Rs. 10 lakh, depending on the situation, are required to register as regular taxable persons under the Goods and Services Tax (GST).

Yes, foreign nationals and NRI are permitted to register a company in India.

Any kind of business organization can move from one business structure to another while following the provisions of the law.

A company can apply for a name reservation using the RUN Form on the MCA Portal as part of the formation procedure. The following uses for a company to register a Reserve Unique Name (RUN) on MCA: To reserve a new company's name and to alter the name of any current company.

Yes, the process of company registration in India is online, and due to this, the directors must have the DSC to sign the necessary papers digitally.

No, after the company has received the certificate of incorporation, it has to file the certificate of commencement in order to start its business.

The process of forming a legal entity, such as a company or LLP, is called incorporation. Starting a business or the process of putting it into operation is commencement.

For registration of the private limited company, first obtain the DSC and DIN. Then, file the important necessary papers along with the registration application in the prescribed form. On being satisfied, the ROC will issue the certificate of incorporation.

Currently, CRC is in charge of processing name availability (RUN) applications and forms pertaining to the establishment of new businesses.

You can choose a private or public limited company depending on the future goals of your business for large-scale operations.

A partnership is governed by the Partnership Act of 1932, and its partners have unlimited liability. Whereas an LLP is governed by the Limited Liability Act of 2008, and the liability of its members is limited.

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