Company registration in Coimbatore is vital for legalizing any business irrespective of its size or operation. But choosing an ideal legal structure can be tricky for new entrepreneurs. It is because every structure adheres to a different set of compliances and legalities. Leaping into a business arena without an apt legal structure can lead to several problems such as management haywire, stringent compliances, and dispute between members. Thus, it is vital for emerging businesses to choose a structure that fits their requirement without incurring complexities. Presently, emerging businesses have access to various legal structures such as Partnership Firms, One Person Companies, Private limited companies, and Public Limited Companies. Anyone looking for company registration in Coimbatore must know about these structures before commencing their business journey. Let’s delve into these structures one by one and know the legalities alongside their pros and cons.
Types of Company Registration in Coimbatore
Following are the different types of company registration in Coimbatore that businesses can choose based on their scope of operation and compliance-management ability.
Partnership Firm
Partnership-based firm is among the most popular business structures in India. It is ideal for small businesses that seemingly have few partners to govern day-to-day operations. It is easy to incorporate owing to minimal paperwork and simple legal procedure. Partners can mutually agree upon norms to be enclosed in a partnership deed which requires the registrar’s seal and authentication. It’s noteworthy that partnership-based firms fall under the legislation called the Partnership Act, of 1932[1].
Documents Required To Incorporate Partnership Firm
- Partnership deed on the judicial stamp paper
- PAN card
- Address proof of the firm in the form of a utility form
- Partners identity address
Pros of Partnership Firm
- Simple structure
- Easy to incorporate
- Minimal paperwork
- Fewer compliances
- Ideal for small businesses
Cons of Partnership Firm
- Unlimited liabilities for partner
- Lack of management expansion
- Lack of transparency
- Less stable
Limited Liability Partnership
A limited liability partnership is a highly-stable version of the traditional partnership-based model. It ensures liability liabilities for each serving partner, thereby ensuring better transparency and stability. LLP Act 2008 governs LLPs in India and the Ministry of Corporate Affair holds the right to incorporate this structure. One can add as many partners as they want to this structure. Another salient highlight that makes LLP a stand-out structure is its ease of conversion. If you are looking for Company registration in Coimbatore that sustains growth and is highly stable, LLP is the way to go.
Documents to Apply For LLP Incorporation
- PAN Card of the Partners.
- Address Proof relating to the Partners.
- Utility Bill of the proposed business place.
- No-Objection Certificate (NOC) from the Landlord.
- Rental Agreement or property ownership paper.
Pros of LLP
- Ensures limited liabilities for partners
- No minimum contribution
- Lower registration cost
- No compulsory audit
- Non-applicability of Dividend Distribution Tax
Cons of LLP
- Financial disclosure is mandatory
- Stringent penalties for non-compliance
- Cannot invest in the stock market
- Mandatory Indian partner
- Lack of tax exemptions
- Minimum Two members.
- Transfer of Ownership.
Private Limited Company
A private limited company is one of the most widely-used structures in India. It offers innumerable benefits over other legal structures such as limited liability, better governance, improved transparency, and so on. The incorporation of a private limited company adheres to certain conditions such as the availability of at least two directors, drafting of charter documents like MoA and AoA, and minimum capital contribution. The Companies Act 2013 regulates this business structure.
Documents for Private Limited Company Incorporation
- Passport-size photos relating to directors
- Address proof concerning directors
- Photo ID proof of active directors
- Specimen signature
- Self-declaration relating to your directorship in other entities
- Rent agreement of business premises
- Memorandum of Association (MOA).
- Articles of association (AOA)
- NOC from the property owner
- Aadhaar card
- PAN card
Pros of Private Limited Company
- Perpetual existence
- Limited Liability
- Transferability of shares between members is possible
- Owning Property
- Borrowing Capacity.
Cons of Private Limited Company
- Complicated registration process
- Tight norms
- Financial disclosure and auditing requirements
- Division of control
One Person Company
The concept of One Person Company or OPC was introduced to enable small businesses having single owners to form a company-like entity that otherwise was not possible in the past. OPC mimics several characteristics of a private limited company. It is free from limitations imposed by structures like partnership and protectorship. A single individual can form an OPC by subscribing his name to the charter document and meeting other norms of the Companies Act, 2013.
Mandatory Documents for OPC Incorporation
- Copy of PAN Card owner.
- Passport-size photo of the proposed owner.
- Copy of Aadhaar Card/ Voter ID.
- Copy concerning Rent Agreement
- Utility bill Business Place
- Landlord NOC (Format will be provided)
- Copy of Property papers (If owned property)
Pros of OPC
- Single owner
- Limited Liability
- Tax Exemptions
- Easy funding
Cons of OPC
- Unsuitable for large business
- No separate legal existence
- A foreign individual cannot form OPC
- No Investment in securities
- No perpetual succession
Public Limited Company
A Public Limited company has emerged as an ideal structure for large businesses in India. It offers an array of benefits such as limited liability, improved transparency, expansion capabilities, and so on. Its favorable structure enables businesses to augment their management hierarchy as their operation expands over time. It is also eligible for public trading of shares, which further translates to better funding capabilities. Public Limited Companies also have better access to various credit facilities for fund procurement. But it is only suitable for businesses eyeing considerable expansion in the future and having large management. The major drawback of this structure is the threshold of compliances it has to fulfill. Also, they are obligated to stay transparent with several authorities when it comes to finances.
Mandatory Documents for Public Limited Company Incorporation
- Proof of identity concerning shareholders & directors.
- Proof of address of all the directors as well as shareholders.
- PAN number relating to shareholders and directors.
- Utility bill concerning proposed office.
- A NOC (No Objection Certificate) from the property owner
- Director Identification Number (DIN) concerning the directors.
- Digital Signature Certificate of the directors.
- Memorandum of Association (MOA).
- Articles of association (AOA)
Pros of Public Limited Company
- Large Capital
- Growth Opportunities
- Limited Liability
- Democratic Management
- Transferability of Shares
- Perpetual Existence
- Economies of Large-Scale Operations
Cons of Public Limited Company
- Volatile Stock Markets
- Strict Regulations
- Potential For A Loss Of Control
- Vulnerability To Takeover
- Increased Scrutiny
Conclusion
Before your dive into the process of Company registration in Coimbatore, make sure to weigh the pros and cons of each structure. It’s important for you to pen down your priorities and capabilities beforehand so that you can pick the structure that suits your requirement.
Read Our Article: Private Limited Company Registration In Coimbatore: Process And Benefits
