Company Registration

A Detail Discussion upon existing Myths of Company Registration

calendar26 Nov, 2020
timeReading Time: 4 Minutes
Myths of Company registration

Starting a new business is always an overwhelming process. The entrepreneur requires making decisions about a lot of things. A successful business is not just about a good idea or an optimized process but must know about the structure of the business, its legal identity, preparedness for future growth, and various other factors play a crucial role in its success. While a Private Limited Company offers a wide range of benefits to businesses, many misconceptions surround this entity. Let us understand the myths of company registration. 

Myths of Company Registration

Entrepreneurs who wanted to register their company or business are stressed out due to various myths of company registration. They are afraid of legal formalities and struggle a lot to register their business. There are certain myths among the company owners need to know before registering a company. Here the myths of company registration that people have when it comes to following the legal process and exactly how to do it. Some of them are discussed below:

Myths of Company Registration

Any Specific Location for a Company

Many individuals who have started the startup are not aware of the fact that they can register a private limited company in the residential premises. According to the Companies Act, 2013[1], there has no restriction in the act for company registration in the residential locations. Though, it is also important for a company to affix its name and have the registered address office at every location they carry the business on. The fact is one can legally register a company in a residential location.

Legal Documents

Many scammers have deceived entrepreneurs by asking them to submit all the original documents during the company registration process. They tried to cheat people, who are unaware, give such fraudulent ways only to realize later. The fact is scanned copies which are duly attested by the applicants are only accepted.

Service Tax Registration

There is the misconception that service tax registration is mandatory, which is not at all true. Only individuals who provide the taxable service are required compulsorily to apply for a service tax registration. Therefore, providing small scale service providers with an option of avail service tax exemption is beneficial for small scale business person who obtain company registration. The fact is service tax registration is not compulsory if your financial income does not exceed the specified bracket.

Company Turnover

It is important to have certain amount of turnover in the business to register a company, which is untrue. The company owners could just start with their new venture. The fact is you do not need any minimum turnover to register the company.

Allocation of Shares

It is the myth that every director of the company must hold shares. The actual shareholders are those individuals who have invested the money in the business. The fact is directors of corporations are not required to have shares.

The Rate of Tax for Private Companies

GST, Service Tax or PF automatically applies to the Private Limited companies. The fact is the rate of tax for private companies can be sometimes higher as compared to that of the individual trader or partnership firm. However, there are several possibilities when tax deductions are possible.

Investment of Shares

It is completely false that natural persons can only be the owners or shareholders of a company. According to a company is an “artificial person” and hence an incorporated company can invest in the shares of another corporation.

The Share Capital of the Company

Share capitals of the company must be deposited in a bank at the time of incorporation; which is NOT true. The fact is entrepreneurs can find the best flexibility in the Private Limited venture. The moment the business gets incorporated, from that day itself, all modifications related to capital, business, official address and many more is possible.

Maintenance of the Legal Teams

It is the myth that the maintenance of legal teams within a company is very expensive. The fact is there is a minimal amount of expense when it relates to accounting and tax filings. There are numerous skilled professionals in a field of account like chartered accountants or company secretaries who can help with these services at an affordable cost.

Registration Renewal

Is it mandatory to renew the registration of a company every year which is entirely false? The fact is one-time registration of the company, and it is completely done. It will remain forever functional unless there is winding up the company. Some fraudulent people might want to pay extra money but do not believe them as it is not true. The only mandatory thing is the filing of the yearly returns with the ROC (Registrar of Companies) and Income Tax department.

Incorporating a Private Limited Company is Time and Cost-Consuming

The fact is that requirement is no longer applicable, making the process of company incorporation cost-efficient too. Further, with our Private Limited Company registration services, you can get through the incorporation process in a simple, affordable, and hassle-free manner.


The choice of the business structure plays an important role in determining its future. You must ensure that you consider all aspects of your business before making this decision. Like other business structures, a Pvt Ltd Company has certain pros and cons too. Ensure that you pick one that aligns with your business requirements and stays away from the myths surrounding it.

On the concluding note, do not get trapped in the myths of company registration rather research the details through official and authentic channels. Connect with us at Corpbiz today and ensure to get the best consultation and advice from our skilled team of legal experts.

Read our article: How to Avail a Company Registration Certificate?

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