Types of Organization
1. Sole Proprietorship- A sole proprietorship is a form of business that is owned and operated by one single person. It is the most simple and prevalent type of business structure. This is because it is very simple and convenient to setup. There are not a lot of compliances to be followed. The owner has full control over the business operations and the profits are taxed as owner’s personal income. Therefore, it is ideal for small, low-risk ventures and individual business owners. However, it has major drawback that the owner is personally liable for all business debts and obligations, and there is no protection of corporate veil.
2. Partnership- A partnership is a business formed by two or more individuals who share profits, losses, and management duties. generally, a partnership firm can be of two types; General partnership, where the partners share management responsibilities as per them and the liability on all partners is unlimited, and Limited Liability Partnerships (LLP) where Partners have limited liability and are not personally accountable for the partnership's debts or injuries. A partnership is best suited if you want to start a business in alliance with a friend or family or any other joint business venture, as it is simple to establish with a partnership agreement, profits are distributed among partners and taxed as personal income and liability varies depending on the partnership type.
3. Private Limited Company - A private limited company is a distinct legal entity that offers limited liability to its shareholders. This form of business must go through various stages of formation which involves a lot of compliance. It Must be registered with the Registrar of Companies (ROC) for which it requires to specify the shareholders' liability is confined to their investment. Further it is a matter of law that it requires a minimum of 2 and a maximum of 200 shareholders. Also, must adhere to statutory regulations and file periodic reports. It is different than a publicly traded company. thus, it is appropriate for small to medium-sized enterprises seeking limited liability and growth potential.
4. Public Limited Company - A public limited company is a separate legal entity that can sell its shares to the public for business also must follow a lot of compliances and is regulated by various authorities as, it is be publicly traded so its entails higher risks with respect to the public. it must be registered with the ROC; the Shareholders' liability in this case is limited to their investment or shareholding percentage. It must have at least 3 directors and 7 shareholders. Added to that, its Shares can be traded on stock exchanges. Thus, it is suitable for large companies that need substantial capital and wish to raise funds from the public.
5. One Person Company (OPC)- An OPC is a type of private limited company that has only one shareholder. It is an amalgamation of sole proprietorship and private limited company. giving the ease of a sole proprietor and safety of limited company. However, it does require compliances to be followed, such registration with the ROC, GST registration periodic auditing etc. the benefit here is that the shareholder's liability is limited to their investment. In short it is ideal for individual entrepreneurs who want the advantages of a private limited company.
Steps to Register a Company
The procedure of incorporation of company is very long and involves a lot of steps. these steps also require a lot of paper works documents and registrations from various departments. here is brief:
1. Obtaining a Director Identification Number (DIN)- Each company’s director(s) must have a unique DIN, without which they cannot function legally. To Apply for a DIN, you have to use Form DIR-3 on the Ministry of Corporate Affairs (MCA) portal, which requires -identity proof, address proof, and a passport-sized photo of the director. The DIN is granted after verification of these documents
2. Name Approval- Each company’s name must be distinct and not resemble any existing company or trademark. This can be done by searching unique name in the RUN (Reserve Unique Name) form on the MCA portal. One must ensure the name adheres to MCA naming guidelines If approved, the name is reserved for 20 days for new companies.
3. Drafting the Memorandum of Association (MOA) and Articles of Association (AOA)- The MOA outlines the company's activities the company is allowed to undertake, while the AOA specifies internal rules of the company. one must create the MOA and AOA based on the company's objectives and regulations set by the Ministry of corporate affairs. The MOA has to include the company name, registered office, objectives, member liability, and share capital. On the other hand, the AOA has to include the details internal management aspects, such as director appointments and meeting procedures.
4. Filing the SPICe+ Form (Simplified Proforma for Incorporating Company Electronically)- This must fill to get your company incorporated., and it includes services like name reservation, incorporation, and PAN/TAN applications. This form has two parts- Part A and Part B. then one has to Attach the following documents and pay the requisite fee
• MOA and AOA.
• Identity and address proof of directors.
• Proof of registered office address (e.g., utility bills, rental agreements).
• Declaration from subscribers and directors.
• Submit the form with the required documents.
After successful document verification, the Registrar of Companies (ROC) issues the Certificate of Incorporation, which includes the Company Identification Number (CIN), incorporation date, and company name.
Company Registration Services
Given the options of company’s and its difficult and complex process is very common to make errors and mistakes. Also, it’s not possible for everyone to know all the steps from pre incorporation to post incorporation. Therefore, one must seek help of experts who are educated in company and tax norms. Thus, you should trust Lex N Tax Associates from registering your company name to drafting the Memorandum of Association (MOA) and Articles of Association (AOA), obtaining Director Identification Numbers (DIN), acquiring the certificate of incorporation, setting up banking and financial resources, to commencing actual operations, holding Annual General Meetings (AGM), and filing annual returns with the registrar.
We provide guidance on the overall functioning of your company and assist you with the online company registration process in Delhi, India. Our firm offers clients top-notch company formation services along with a wide range of additional services, including tax consultancy, business advisory, risk management, cost management, and accounts payable services. Lex N Tax Associates is always available to address your inquiries, such as how to register a new company in India, the online company registration process, the steps for online company registration services in Delhi, and the procedure for private limited company registration in Delhi.