Comparative list of different types of business structures in India
Company Type
|
Best Suited For
|
Tax Benefits
|
Legal Compliance Requirements
|
Limited Liability Partnership (LLP)
|
Service-based ventures or firms with modest capital needs
|
Eligible for 3-year tax holiday under Startup India, and benefit on depreciation
|
Must file business tax returns and annual ROC returns
|
One Person Company (OPC)
|
Solo entrepreneurs aiming to reduce personal liability
|
3-year Startup India tax holiday, enhanced depreciation, no dividend tax
|
Business tax return and ROC filing are mandatory
|
Private Limited Company
|
Growing businesses expecting high revenue
|
Tax holiday for first 3 years under Startup India, higher depreciation benefit
|
Requires business tax returns, ROC filings, and annual statutory audit
|
Public Limited Company
|
Large-scale enterprises with substantial turnover
|
Eligible for Startup India tax benefits for the initial 3 years
|
Business tax filing, ROC submission, and mandatory statutory audit required
|
Importance of choosing the right business structure
Selecting the appropriate business structure is a critical decision, as it directly impacts your income tax obligations and ongoing legal compliance. Different structures come with varying regulatory requirements. For instance, a sole proprietorship only requires the filing of an income tax return, whereas a registered company must file both income tax and annual returns with the Registrar of Companies.
Additionally, companies are legally required to get their books of accounts audited annually, which incurs added expenses related to hiring auditors, accountants, and tax professionals. These compliance responsibilities highlight the importance of choosing a business structure that aligns with your willingness and capacity to manage such obligations.
Moreover, the business structure you choose can influence your ability to attract investors. Legal and recognised entities such as LLPs or private limited companies tend to inspire more confidence among investors compared to informal setups like sole proprietorships. A sound business idea is more likely to secure funding when backed by a formal and compliant business framework.
Requirements for company registration in India
- Unique company name: Ensure the proposed name is distinct from existing registered companies or trademarks.
- Minimum directors: One for OPC, two for private, and three for public companies.
- Minimum members: One for OPC, two for private, and seven for public companies.
- Citizenship requirement: At least one director must be an Indian citizen, though foreign nationals can also be directors.
- Director Identification Number (DIN): All directors must obtain a DIN.
- Digital Signature Certificate (DSC): Directors and shareholders need a DSC for signing documents.
- Registered office: A physical address in India is necessary, typically in the state of incorporation.
- Memorandum of Association (MOA) and Articles of Association (AOA): Prepare these documents outlining the company's objectives and operational rules.
Company registration authorities in India
- Registrar of Companies (ROC): Office under the Indian Ministry of Corporate Affairs, administers various acts including Companies Act, 2013, Limited Liability Partnership Act, 2008, Company Secretaries Act, 1980, and Chartered Accountants Act, 1949.
- Ministry of Corporate Affairs (MCA): Oversees the administration of companies and LLPs in India.
- Central Registration Centre (CRC): Facilitates swift processing of incorporation, closure, and regulatory compliance filings.
- Centralised Processing for Accelerated Corporate Exit (C-PACE): Aims for expedited closure processes for companies.
- CPC (Central Processing Centre): Ensures speedy processing of applications and forms for incorporation, closure, alterations, and capital raising.
These authorities collectively streamline the regulatory procedures, promoting ease of doing business and facilitating the corporate ecosystem in India.
Documents required for company registration in India
To register a company in India, you must submit a set of essential documents as per Ministry of Corporate Affairs (MCA) guidelines:
- PAN card of directors: Mandatory for identity verification during registration.
- Any one address proof: Aadhaar card, passport, voter ID, or driving licence of each director.
- Passport-size photos: Required from all directors for documentation purposes.
- Proof of registered office address: Recent utility bill (not older than 2 months).
- For rented office: Rent agreement and No Objection Certificate (NOC) from the owner.
- For owned office: Property ownership document like sale deed or tax receipt.
- Consent form (DIR-2): Written consent from directors to act in their respective roles.
- Declaration form (INC-9): Affirms directors meet eligibility criteria under Companies Act.
- Memorandum of Association (MOA): Outlines the company’s main objectives and scope.
- Articles of Association (AOA): Defines rules for internal governance and responsibilities.
- Digital Signature Certificate (DSC): Needed by directors to sign documents digitally.
- Director Identification Number (DIN): Mandatory for each director, applied via MCA portal.
Documents Required for Company Registration in Delhi
- PAN card of directors and shareholders.
- ID Proof: Aadhaar card, Voter ID, Driving license, Passport (for foreign nationals).
- Address Proof: Bank statement, utility bills, resident card (for foreign nationals).
- Proof of Registered Office: Utility bills, rental agreement, property tax receipts, sale deed.
Understanding the company registration process in India
The process for company registration in India involves several steps:
- Begin by applying for the Digital Signature Certificate (DSC) as well as the Director Identification Number (DIN) for every director involved in the company.
- Fill out part A of the SPICe+ form and reserve the company name via the Ministry of Corporate Affairs (MCA) website.
- Proceed to fill out the company details in part B of the SPICe+ form.
- File the electronic versions of the Memorandum of Association (eMOA) and the Articles of Association (eAOA).
- Fill out the AGILE-PRO form for the opening of a bank account and the registration of EPFO, ESIC, GSTIN, and professional tax, if needed.
- Upload the required paperwork as per the MCA's checklist.
- Submit the completed SPICe+ form on the MCA website, attaching the DSC from the proposed director and a declaration from a licensed professional (Chartered Accountant, Company Secretary, Cost Accountant, or Advocate).
- Pay the company registration fees and the Registrar of Companies (ROC) stamp duty through the MCA website and generate challans accordingly.
- The application and documents will be processed by the Central Registration Centre (CRC) before being forwarded to the ROC for verification.
- The ROC, upon successful verification, will register the company and issue a Company Incorporation Certificate, a Company Permanent Account Number (PAN), and a Company Tax Collection and Deduction Number (TAN).
Adherence to these steps ensures a smooth, compliant company registration process.
Company registration fees in India
Company Type
|
Government Fees
|
Professional Fees
|
Additional Costs
|
Private Limited Company
|
Rs.7,000 to Rs.15,000 (based on authorised capital)
|
Rs.15,000 to Rs.25,000 (for CA or CS services)
|
Digital Signature Certificate (Rs.2,000), Director Identification Number (Rs.500 per person)
|
Public Limited Company
|
Rs.20,000 to Rs.50,000 (based on authorised capital)
|
Rs.30,000 to Rs.50,000
|
Same as Private Limited Company, plus extra compliance-related costs
|
Limited Liability Partnership (LLP)
|
Rs.5,000 to Rs.10,000
|
Rs.10,000 to Rs.20,000
|
Cost of Digital Signature Certificate and LLP Agreement
|
One Person Company (OPC)
|
Rs.7,000 to Rs.15,000
|
Rs.12,000 to Rs.20,000
|
Digital Signature Certificate and Director Identification Number
|
Section 8 Company (Non-Profit)
|
Rs.5,000 to Rs.10,000
|
Rs.20,000 to Rs.30,000
|
Similar to other types, plus cost for Section 8 licence
|
Time required for an online company registration in India
Typically, registering a company in India takes around 8 to 10 business days, assuming all documents are accurate and the business name is available.
If there is an objection raised during the process, the timeline may extend to up to 12 working days.
Day
|
Activity
|
Day 1
|
Make a booking and understand the documents required.
|
Day 2 - 3
|
Document preparation and finalising.
|
Day 3
|
Application of company registration.
|
Day 4 - 8
|
Await for approval of application.
|
Day 8 - 12
|
Registration approval or objection raised.
|
Time required for an online company registration in Delhi
In India, registering a Private Limited Company typically takes 10-18 working days, provided all the required documents are submitted, and there are no complications. However, the actual time may vary depending on various factors such as the workload of government authorities, completeness of documents, and accuracy of information provided.
Process
|
Estimated Time
|
Preparation of documents
|
1 - 2 days
|
Obtaining Digital Signature Certificates
|
1 - 3 days
|
Obtaining Director Identification Numbers
|
1 - 2 days
|
Filing application with Registrar of Companies
|
1 - 2 days
|
Verification and approval by ROC
|
2 - 5 days
|
Issuance of Certificate of Incorporation
|
1 - 2 days
|
Total
|
7 - 14 days
|
Please note that these are estimated times and can vary based on individual circumstances and government processing times.
Benefits of company registration
There are several advantages to registering your company. Let us look at some of them.
- Legal compliance: Company registration ensures that your business complies with all legal and regulatory norms. It makes it easy for you to file taxes, maintain records, and create trust among customers and investors.
- Access to government aid and subsidies: With company registration in place, your business can access government schemes and incentives such as MSME benefits, export incentives, and more.
- Easy expansion across states: With proper registration, businesses can easily expand their operations to other states, opening up new markets and customers.
- Protection of personal assets: Registering your company as a separate legal entity from yourself provides personal asset protection, shielding you from any liability in case of business losses or debts.
- Access to business loans: Banks and financial institutions require registered documents from your business to provide a business loan. With proper company registration, you can quickly secure loans for your business, accelerating growth and development.
Conclusion
Starting a business can be a daunting process, but with Bajaj Finserv Business Loan, you can achieve your entrepreneurial dreams with ease. Proper registration brings significant benefits such as legal compliance, access to government incentives, and access to business loans. If you are looking to start a business, ensure that you complete the registration process on time and with all the necessary documents to realise the benefits of being a legal business entity.
Apply for a Bajaj Finserv Business Loan today and finance your entrepreneurial dreams with ease. With Bajaj Finserv, you can get access to a business loan of up to Rs. 80 lakh, minimal documentation, faster disbursal, and flexible repayment options. You can also benefit from a competitive business loan interest rate, helping you manage repayments efficiently and keep your business financially sound. Do not let financial constraints slow down your business growth - apply now and take the first step towards achieving your entrepreneurial dream.