5 Steps of Registering Your Company in India

Registering a company in India is a crucial step for any entrepreneur aiming to build a credible and legally recognised business. It provides several benefits, such as limited liability protection, access to funding, increased trust from clients and investors, and more. A registered company also enjoys legal recognition, which supports smooth operations and long-term business growth.

In this blog, you will learn about “How to register a company in India”, including types of company registration in India, documents required, registration procedure, and more.

What is Company Registration?                                                                      

Company registration in India is the official process of legally setting up a business under the Companies Act, 2013. This process is managed by the Ministry of Corporate Affairs (MCA) through the Registrar of Companies (RoC). Once registered, the business is recognised as a separate legal entity from its owners. This gives the business its own identity and the legal right to operate, enter into contracts, and own assets.

Types of Company Registration in India

India offers seven distinct types of company registrations, each catering to different business needs and structures:

1. Sole Proprietorship

A sole proprietorship is the most basic type of business structure in India, where one individual owns and controls the entire operation. The owner takes care of all operations and is personally liable for the business’s profits, losses, and obligations.

2. One Person Company (OPC)

An OPC allows a single individual to form a company with limited liability. It combines the benefits of a private limited company with the simplicity of a sole proprietorship. This business structure is introduced under the Companies Act, 2013.

3. Partnership Firm

A partnership firm is a type of business where two or more individuals manage and operate a business. They agree to share the profits and losses. This business model is governed by the Indian Partnership Act, 1932. It requires a partnership deed for registration.

4. Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is a hybrid business structure combining the flexibility of a partnership with the benefits of limited liability. It is governed by the Limited Liability Partnership Act, 2008. The liability of each partner is restricted to the amount they have committed to contribute.

5. Private Limited Company (PLC)

A Private Limited Company (PLC) is a distinct legal entity that offers limited liability protection to its shareholders. It limits share transfers and does not allow public share offerings. The company must have at least two members to be formed.

6. Public Limited Company (Ltd)

A public limited company can offer its shares to the public and is listed on stock exchanges. It requires a minimum of seven members and complies with stringent regulatory requirements under the Companies Act, 2013.

7. Section 8 Company

A Section 8 company is a non-profit organisation. It is formed with the objective of advancing fields such as trade, art, science, sports, education, research, social welfare, religion, charitable activities, or environmental conservation. Profits are reinvested to further the company's objectives.

Why is Company Registration Important?

Here are the key reasons:

• Legal Recognition and Separate Legal Entity

Once registered, a company becomes a separate legal entity distinct from its owners. This means the company can own property, enter into contracts, and sue or be sued in its own name. This legal recognition provides credibility and facilitates smoother business operations.

• Limited Liability Protection

Company registration provides limited liability protection to shareholders or members. This means the personal assets of the owners are protected if the business faces debts or legal issues. They are liable only up to the extent of their investment in the company.

• Access to Funding and Investment Opportunities

A registered company can raise capital through different methods, like equity, loans, and venture capital. Investors and financial institutions often prefer dealing with registered entities due to their structured governance and compliance with statutory requirements.

• Perpetual Succession

A registered company has a perpetual succession. This means its existence is not affected by changes in ownership or management. The company continues to exist until it is legally dissolved and ensures business continuity.

• Ease of Transferability

Ownership in a registered company can be easily transferred by selling or transferring shares. This flexibility helps in expanding the business and planning for smooth succession in the future.

• Enhanced Brand Image and Trust

Registration enhances the credibility and trustworthiness of a business among customers, suppliers, and other stakeholders. It reflects a commitment to compliance and ethical business practices, which can be a competitive advantage.

• Eligibility for Government Schemes and Contracts

Registered companies are eligible to participate in various government schemes, subsidies, and tenders. This opens up opportunities for growth and expansion, specifically for startups and small businesses.

• Structured Management and Governance

Company registration mandates adherence to statutory requirements, including regular filings and disclosures. This promotes transparency, accountability, and structured management, which are essential for sustainable business growth.

Documents Required for Company Registration in India

Here is the list of documents required for Company registration in India:

• PAN Card (mandatory for Indian nationals)
• Passport (mandatory for foreign nationals)
• Aadhaar, Voter ID, Driving License, or Passport (for address proof)
• Recent utility bill (not older than 2 months)
• Rent agreement (if rented)
• No Objection Certificate (NOC) from the owner
• Recent utility bill (not older than 2 months)
• A recent passport-sized photo of all directors and subscribers
• Digital Signature Certificate (DSC) for all directors and subscribers
• Director Identification Number (DIN)
• Memorandum and Articles of Association (MoA & AoA)
• Declarations and Affidavits

How to Register a Company in India?

Here is a step-by-step process to register a company in India:

Step 1: Obtain a Digital Signature Certificate (DSC)

Every proposed director must obtain a Digital Signature Certificate (DSC) froma government-approved certifying authority. This DSC is crucial for signing electronic documents during the registration process.

Step 2: Apply for Director Identification Number (DIN)

Every director needs to apply for a Director Identification Number (DIN) by submitting Form DIR-3. This unique number is essential for all directors and is required to file incorporation documents.

Step 3: Reserve Company Name

Choose a unique name for the company and apply for its availability through the MCA's RUN (Reserve Unique Name) service. Make sure the name adheres to the naming rules set by the Ministry of Corporate Affairs (MCA).

Step 4: Prepare Incorporation Documents

Draft the Memorandum of Association (MoA) and Articles of Association (AoA), which define the company's objectives and internal regulations. These documents must be signed by the subscribers and witnessed accordingly. All directors also need to gather other required documents as mentioned above in the document section.

Step 5: File SPICe+ Form

Fill out and submit the SPICe+ form electronically through the MCA portal. This integrated form facilitates the incorporation process. It includes:

• SPICe+ Part A: Application for company name reservation.
• SPICe+ Part B: Incorporation application, including details of directors, shareholders, and registered office.
• eMoA (INC-33): Electronic Memorandum of Association.
• eAoA (INC-34): Electronic Articles of Association.
• AGILE Pro Form: Application for Goods and Services Tax (GST) registration, Employee Provident Fund (EPF), Employee State Insurance (ESI), and Professional Tax (PT).
• Form INC-9: This form is used to declare non-conviction and compliance by the proposed directors and subscribers.
• URC-1: This form is required for conversion of a company.

Step 6: Pay Fees and Stamp Duty

Pay the required fees and stamp duty based on the company’s authorized share capital. This payment can be done online through the MCA portal.

Step 7: Obtain Certificate of Incorporation

Once the Registrar of Companies (RoC) verifies all submitted forms and documents, a Certificate of Incorporation is issued. This certificate signifies the legal existence of the company under the Companies Act, 2013.

Step 8: Apply for PAN and TAN

The company must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). These are essential for tax compliance and financial transactions.

Step 9: Register for GST (if applicable)

If the company's turnover exceeds the prescribed threshold limit or if it engages in interstate supply of goods and services, it must obtain GST registration. This is necessary for compliance with indirect tax laws.

Step 10: Open a Bank Account

Once the company receives the Certificate of Incorporation, PAN, and other required documents, it becomes eligible to open a business bank account. This account is necessary for conducting daily financial activities and managing company transactions.

Conclusion

Registering a company in India is a vital step toward building a legally recognized and credible business. It offers benefits like limited liability, funding access, legal identity, long-term growth potential, and more. By following the structured registration process under the Companies Act, entrepreneurs can ensure smooth business operations and gain trust among investors, customers, and stakeholders. If you have any queries about company registration, contact Online Legal India. They have experts to assist you.