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Types of Company Registration In India

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Types of Company Registration In India

India is becoming the start-up hub these days. Especially after getting words of encouragement from the government and leading businessmen from the field. To start any business, the primary step you need to take is to register your entity with the proper channels. It is not only mandated by the law but also serves as an added security to your venture and keeps it away from unnecessary troubles. There are different types of companies, and as per that, the registration requirements change. Read ahead to find out about the seven prevalent types of companies and their registration requirement in India:

  • Private Limited Company: 

Most business owners choose the most common type of company registration. When you opt for the Private Limited Company, your company stays private. All the company shareholders share the liability of all the company assets and are equally responsible for it. For a company to qualify for registration, several conditions must be met. Some of them are listed below: 

  1. The number of the shareholders must be between 2 to 200. 
  2. The company must have at least 2 directors. It is possible to have a maximum of 15 directors. At least one of the directors must be an Indian citizen. 
  3. The official address of the company must be in India. 
  4. The assets of the company must be over Rs. 1,00,000.
  • Public Limited Company: 

A Public Limited Company can be owned by the general public and not just the private individuals. The government promotes these types of companies to increase the people’s interest in the start-ups and grow the small-scale business industry in India, particularly in rural sections. Registration of these companies must follow the company law, and before taking any step in the registration, you must obtain the ROC certificate from the proper authorities. 

  • Partnership Company: 

When the company is the effort of two or more people, they can opt for the Partnership Company Registration. These companies then are managed under the Indian Partnership Act 1932. The proprietorship and the liability towards the assets can either be divided equally among the partners or any other type of division is also possible. The assets and liabilities are mentioned in the registration documents or the registration deed so that there will not be any fraudulent practice from any party. The partners share profits and losses following the registration deed. 

  • Limited Liability Company: 

In the Limited Liability Company or LLP, the asset distribution and liabilities are limited. The amount of capital or the shares each partner holds is limited to that percentage of liability only. Your personal assets are not part of the company’s liability. To register yourself or your company as a Limited Liability Company, you must hold a capital of Rs. 1 Lac with at least one partner who is an Indian Citizen. 

  • One Person Company: 

This type of company can be owned by Indian citizen who runs their own business. The business owner gets full proprietorship and does not have to have any partner for the registration. You also get full liability protection for all the assets. To qualify for One Person Company registration, you must have at least Rs. 1 Lacs as an asset value. All the company-related operations are handled by one person only. 

  • Sole Proprietorship Company: 

Similar to the One-Person Company, Sole Proprietorship Companies are also run and managed by a single individual only. However, there are no requirements on the capital or the assets that are liable to the company. You bear the responsibility for all the profits and losses incurred by your company. Work from home or the businesses that are and can be run from home are the most suitable for the Sole Proprietorship Company Registration. 

  • Section 8 Company: 

Section 8 Companies consist of non-profit companies and NGOs. The nature of the company should be charity. The government encourages organizations that focus on the betterment of the environment, development, and innovation in arts, science, and education. The NGOs dedicated to helping the poor and needy are also the biggest beneficiaries of the Section 8 Company registration. The requirement for the registration of the Section 8 Company are as follows: 

  • The NGO or Non-Profit company must have at least two or more shareholders or directors. 
  • At least one shareholder or the director must be of Indian nationality. 
  • The official address or the correspondence address must be located in India. 

Starting a business is a defining moment of your life. Therefore, you should ensure that you take all the necessary steps to legitimize it. The company’s registration is the primary step that you can not skip. However, before going through the actual procedure, read and understand the types of company registration and pick out the appropriate one for your company and its specifications and requirements.

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What are the benefits of registering the company?

The benefits of the company registration are listed below: 

  • After registration, your company becomes a legal entity. 
  • Registered companies can get extra financial aid or witness an increase in their borrowing capacity. 
  • Because of the legitimacy, you can sue any party if you are the victim of fraud. 
  • You can raise your equity exponentially after the registration.

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Types of Company Registration In India FAQs:

1. Is the registration of the company mandatory for all the companies?

Yes. Under the Companies Act 2013, all the new businesses and companies must register. Failing to do so can invite legal troubles in your direction.

2. Is GST mandatory for all the companies?

Yes. All the companies after the registration should also register for GST. The company’s turnover must be above Rs. 20 Lacs for the GST Registration.

3. What kind of Bank Account do I need to run a business?

You need to open a current account in your bank to do any business-related transaction.

4. Are the unregistered companies illegal?

No, unregistered companies are not illegal. Under the law purview, they are legal. The benefits and the aids available to registered companies do not apply to unregistered companies.

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