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It's crucial to stay on the right side of the law when starting a business. Legal mistakes can lead to penalties and other consequences that can be detrimental to your company. The last thing that you want is getting penalized over a legal mistake that you were not even aware of!

As an entrepreneur, it's important to prioritize the registration of your company. This can save you from potential legal issues in the future. While it's understandable that building a team, pitching to clients, and developing your product are top priorities, don't neglect the importance of properly registering your company. It's a crucial step on your journey as an entrepreneur.

Prerequisites

Before registering a company in India, there are a few pre-registration requirements that need to be met. These include:

  • Choosing a suitable name for the company: The name of the company should be unique and should not be similar to any existing company or trademark. The name can be checked for availability using the Ministry of Corporate Affairs (MCA) portal.
  • Choosing a suitable domain for the company name: Just as finding a business name is not easy, finding a Top Level domain (TLD) available for the name is equally difficult. It takes time to find a name with a available .com TLD domain for it.
  • Obtaining a Digital Signature Certificate (DSC): A DSC is required for the directors and shareholders of the company to complete the online registration process.
  • Choosing a suitable Business Structure: This is the most important step towards registering your new business. Choose a business structure as per your business requirements, budget, taxes and compliances.
  • Finding a Good Professional: Luckily we can help you in your quest of getting your company registered in India. Our professional are apt in registering business, companies, firms and corporate in India and they are doing this for years so that startups don't get into legal complications.

A golden rule of thumb, you should never use your personal bank account for any business transactions. This can save you from potential legal issues in the future. So separate your personal and business finances by using a separate bank account for business transactions.

How to choose a great company name

Choosing a company name is an important decision that can impact the success and growth of your business. Here are some tips to help you choose a company name that is right for you:

  • Make it unique: Your company name should be unique and distinct from other businesses in your industry. This will help you stand out and make it easier for customers to remember your brand.
  • Keep it simple: A simple, easy-to-pronounce company name is more likely to stick in the minds of potential customers. Avoid complex spellings or words that are difficult to pronounce.
  • Consider your audience: Your company name should be relevant to your target audience and the products or services you offer. It should also be catchy and memorable.
  • Check for availability: Before you decide on a company name, make sure it's available to use. Check with MCA and Trademark Lists and do a search on social media and the internet to ensure that the name is not already in use.
  • Domain availability: In this age of online presence, choose a name whose domain is available. It doesn't make any sense to choose a name whose domain name is already taken.
  • Get Authorization: Some names may require authorization from Union Government. If your business has names like Union, Prime Minister, Statutory, Scheme, National, Small Scale, Federal etc, you will definitely need authorization from Central Government. Also if you include words like Insurance, Venture Capital, Bank and Mutual Fund, you need to get regulatory authorization from the regulatory bodies like SEBI, IRDA and RBI.
  • Avoid using acronyms: While acronyms can be memorable, they may not be easy for everyone to understand or spell. Consider using a full, descriptive name instead.
  • Get feedback: Before making a final decision, ask for feedback from friends, family, and colleagues. They may have insights or suggestions that can help you choose a strong, memorable company name.

Though this list mentions what to choose for a company name but there are some guidelineas and limitations you have to consider in order for your proposed name to get approved from MCA.

  • Do not use Generic Names: Generic names that includes words which are commonly used are not allowed. Though you can use them in suffixes or in between. Example you cannot incorporate Water Pvt. Ltd. but you can use water as a suffix or in between in your name like Legalbae Water Pumps Pvt. Ltd.
  • Do not use offensive words: Use of names that may violate constitution, emblem, culture or religion is strictly prohibited.
  • Do not use Government terms: Some words are reserved for State Owned Companies or Govt. Entities like "state". You cannot use the word "State" in your proposed business name.
  • Do not use name identical to other businesses: Names identical to businesses are not allowed. Also names similar to company names which are dissolved or liquidated are not allowed for some duration.

How to choose a domain for your business

Choosing a great domain name for your business can be an important step in establishing your online presence and building your brand. Here are a few tips to consider:

As I told earlier, in this age it makes no sense to reseve a company name whose domain has already been taken. So if it is the case instead of going back and fourth with the present domain owner, you should change the name. Unless you are Elon Musk and can pour a ton of money to buy a already taken domain for your billion dollar idea. Do you know Elon Musk told an Tesla employee to sit at the door of the previous owner of the domain "Tesla.com" so that the owner gives up and sell the domain.

Choose the right domain extension. They matter a lot in the trust and facevalue of your business. There are many different domain extensions to choose from (.com, .net, .org, etc.). In general, .com is the most popular and most trusted extension, so it's a good choice for most businesses. Also, you may want to consider registering multiple variations of your domain name to protect your brand and prevent others from using it.

Choose a Business Structure that will suit your needs

In India, businesses have a variety of options when it comes to choosing a company structure. The most common types of company structures in India include sole proprietorship, partnership, private limited company, public limited company, One Person Company (OPC), and Limited Liability Partnership (LLP). As a founder, you should be clear about the type of your startup. Before deciding to chose the business structure, clarify your business type, goals, and objectives before deciding, as each type carries its own legal implications.

Types of business structures in India

There are six main types of companies you can register in India:

If you are planning to raise money from Investors, Venture Capitalists, Private Equity Firms or from Foreign Investors you have to register your company as an Limited Liability Partnership or Private Limited Company or Public Limited Company.

Sole Proprietorship

A sole proprietorship is the simplest and most common form of business in India. It is owned and operated by a single individual, who is personally responsible for all the debts and obligations of the business. While a sole proprietorship is easy to set up and requires minimal paperwork, it offers no protection to the owner's personal assets in the event of business failure.

Advantages of the sole proprietorship

  • Easy to set up: A sole proprietorship is relatively easy to set up in India. There are few legal requirements, and you can start your business with minimal paperwork.
  • Low costs: Setting up and running a sole proprietorship is generally less expensive than setting up and running a different business structure, such as a partnership or a private limited company.
  • Full control: As the sole owner of the business, you have complete control over the operations and decision-making processes.
  • Flexibility: A sole proprietorship allows you to be flexible and make decisions quickly. You can change your business model, products, or services as needed without having to consult with partners or shareholders.
  • Personal liability: As the sole owner of the business, you are personally liable for any debts or legal issues that arise.
  • Potential tax benefits: Sole proprietorships may be eligible for certain tax benefits in India, such as the ability to claim certain business expenses as deductions on your personal tax return.

How to register a Sole Proprietorship?

Registering a Sole Proprietorship is very easy and straighforward. Any document from the Commerce Department of Central or State Government which states the trade or legal name of the business and the name of the proprietor constuitues a legal Sole Proprietorship Business. Though documents may vary from trade to trade. But generally a Shops and Establishment Certificate is all you need to start your business. If your revenue exceeds certain amount or you are doing inter-state business or registering your business in e-commerce portals like Amazon or Flipkart etc. you have to register for GST.

We at Legalbae help professionals to register for Sole Proprietorship at Rs.999/- Anywhere in India in a matter of days. Click Here or visit https://legalbae.com/sole-proprietorship-registration/ to get started.

Overall, a sole proprietorship can be a good choice for small businesses or entrepreneurs who want a simple and flexible business structure with low setup and running costs. However, it's important to keep in mind that a sole proprietorship also carries personal liability and may not be suitable for businesses with high risk or potential for large debts.

Partnership Firm

A partnership is a business owned and operated by two or more individuals. In a partnership, the partners share the profits and losses of the business equally or as agreed upon in the partnership agreement. Partnerships can be either general partnerships, in which all partners are personally responsible for the debts and obligations of the business, or limited partnerships, in which some partners have limited liability. Partnerships offer more flexibility than a sole proprietorship, but they also come with more legal and financial responsibilities.

Advantages of a Partnership Firm

  • Shared responsibility: In a partnership firm, the partners share the responsibility of running the business and can divide tasks and decision-making among themselves.
  • Shared profits: Partners in a partnership firm also share the profits of the business, which can be an incentive for partners to work hard and contribute to the success of the business.
  • Easy to set up: A partnership firm is relatively easy to set up in India. There are few legal requirements, and you can start your business with minimal paperwork.
  • Shared knowledge and expertise: Partners in a partnership firm can bring different skills, knowledge, and expertise to the business, which can be beneficial for the overall success of the business.
  • Easy to maintain: A partnershiop firm does not require to submit annual returns to the MCA.
  • Much less compliances: A partnership firm does not require Statuary Audit.

How to register a Partnership Firm?

Registering a Partnership Firm is also very easy. All you need is a Notarized Partnership Deed. Though you can register the partnership deed as per The Indian Partnership Act, 1932 in your respective State Commerce Department, but it is not mandatory and is at the discretion of the partners. If you want your partnershiop firm get recognised as a startup or get legal status registering your partnership firm in the respective department is mandatory. Also if your revenue exceeds certain amount or you are doing inter-state business or registering your firm in e-commerce portals like Amazon or Flipkart etc. you have to register for GST.

We at Legalbae help professionals to register for Partnership Firms at Rs.999/- Anywhere in India in a matter of days. Click Here or visit https://legalbae.com/partnership-firm-registration/ to get started.

Overall, a partnership firm can be a good choice for small businesses or entrepreneurs who want to share the responsibilities and profits of running a business. However, it's important to keep in mind that a partnership firm also carries shared liability, and all partners are personally responsible for the debts and legal issues of the business. It's also important to have a clear partnership agreement in place to outline the roles, responsibilities, and rights of each partner.

Limited Liability Partnership (LLP)

An LLP is a partnership in which the partners have limited liability for the debts and obligations of the business. It combines the benefits of a partnership, such as flexibility and shared profits, with the limited liability protection of a private limited company. LLPs are governed by the Limited Liability Partnership Act, 2008. An LLP must have at least two partners known as designated partner who is responsible for managing the LLP's affairs.

Advantages of a Limited Liablity Partnership

  • Limited liability: One of the main advantages of an LLP is that the liability of the partners is limited to their capital contributions. This means that the personal assets of the partners are generally not at risk if the business incurs debts or faces legal issues.
  • Popularity: LLPs are getting very popular due to easy to set up and maintain. It is a combination of ease of a Partnership firm and a legal structure of a Private Limited Company
  • Shared knowledge and expertise: Partners in a partnership firm can bring different skills, knowledge, and expertise to the business, which can be beneficial for the overall success of the business.
  • Easy to maintain: An LLP has much lesser auditing and taxation legalities than a Private Limited Company.
  • Compliances: The audit of an LLP is mandatory if the LLP has a total turnover of more than INR 40 Lacs in a financial year or if it has contributed capital of more than INR 25 Lacs.
  • Ability to raise capital: An LLP can raise capital by admitting new partners or from Investors, Venture Capitalists or Private Equity Firms by issuing debentures, which can be helpful for businesses that need additional funding.
  • Foreign Direct Investment (FDI): FDI is also permitted for LLP provided certain specified conditions are met.

How to register a Limited Liability Partnership Firm?

Registering an LLP requires quite a few steps:

Also if your revenue exceeds certain amount or you are doing inter-state business or registering your firm in e-commerce portals like Amazon or Flipkart etc. you have to register for GST.

We at Legalbae help business and startups to register as an Limited Liability Partnership at Rs.4999/- Anywhere in India in a matter of days. Click Here or visit https://legalbae.com/llp-registration/ to get started.

Overall, an LLP can be a good choice for small businesses or entrepreneurs who want the benefits of a partnership firm (such as shared responsibility and profits) with the added protection of limited liability. However, it's important to keep in mind that an LLP is a more complex business structure than a sole proprietorship or a partnership firm, and there are additional legal and compliance requirements that must be followed.

One Person Company

An OPC is a type of private limited company that is owned and operated by a single individual. It offers the benefits of a private limited company, such as limited liability protection, but with the simplicity and flexibility of a sole proprietorship. An OPC must have at least one nominee director in case the owner becomes incapacitated or passes away.

Advantages of a One Person Company

  • Ease of formation: An OPC can be easily set up and registered with the Ministry of Corporate Affairs (MCA). It requires only one person to incorporate and can be done entirely online through the MCA portal.
  • Limited liability: The liability of the owner of an OPC is limited to the extent of their capital contribution. This means that the owner's personal assets are protected in the event of the company's insolvency.
  • Popularity: OPCs are very popular among solor entrepreneurs who want their business get legal reognization but can be maintained single handedly.
  • Flexibility: An OPC offers greater flexibility in terms of management and decision-making compared to other forms of business. As the sole owner and director, the OPC owner has complete control over the company and can make all business decisions.
  • Simplified compliance: An OPC has fewer compliance requirements compared to other forms of business. For example, an OPC is not required to hold annual general meetings or appoint an auditor.
  • Potential for growth: An OPC can easily convert into a private limited company if the owner wishes to bring on additional shareholders or raise capital. This allows for the potential for growth and expansion.

How to register a One Person Company?

Registering an OPC requires quite a few steps:

Also if your revenue exceeds certain amount or you are doing inter-state business or registering your firm in e-commerce portals like Amazon or Flipkart etc. you have to register for GST.

We at Legalbae help entrepreneurs and startups to register as an One Person Company at Rs.6999/- Anywhere in India in a matter of days. Click Here or visit https://legalbae.com/opc-registration/ to get started.

Overall, an OPC can be a good choice for small businesses or entrepreneurs who want the benefits of a sole proprietorship with the added protection and recognization of Private Limited Company. However, it is important to note that an OPC is not suitable for all business ventures, and the owner should carefully consider their business needs and goals before deciding on the appropriate business structure.

Private Limited Company

A private limited company is a privately-held company with a minimum of two and a maximum of 200 shareholders. The shareholders have limited liability, meaning they are only responsible for the amount of money they have invested in the company. A private limited company must have a board of directors, who are responsible for managing the company's affairs. A Private Limited Company is governed by the Companies Act, 2013. Private limited companies offer more protection to shareholders than a partnership or sole proprietorship, but they also require more paperwork and compliance with government regulations.

Advantages of a Private Limited Company

  • Greater credibility: A private limited company may be perceived as more credible and trustworthy by clients and business partners compared to other forms of business.
  • Separate legal entity: A private limited company is a separate legal entity from its owners. This means that it can enter into contracts, own assets, and incur liabilities in its own name.
  • Potential for raising capital: A private limited company can issue shares to raise capital. This can be done through the issue of new shares or by selling existing shares to new shareholders.
  • Professional management: A private limited company can appoint professional managers to run the company, allowing the owners to focus on other matters.
  • Potential for expansion: A private limited company can easily expand and grow by bringing on additional shareholders or by issuing new shares.

How to register a Private Limited Company?

Registering an Private Limited Company requires quite a few steps:

Also if your revenue exceeds certain amount or you are doing inter-state business or registering your firm in e-commerce portals like Amazon or Flipkart etc. you have to register for GST.

We at Legalbae help entrepreneurs and startups to register as Private Limited Company at Rs.6999/- Anywhere in India in a matter of days. Click Here or visit https://legalbae.com/company-registration/ to get started.

Overall Private Limited Companies are mostly favoured for Registering a business in India. Ofcourse it comes with various compliances and legalities that may sound costly, but if you can maintain those a Pvt. Ltd. company is the best way to raise funds as well as issue debt bonds. Also it is the preferred way to raise FDIs and does not raise any complications in doing so. Also it is a bsuiness structure that is recognized in the global market.

Public Limited Company

A Public Limited Company is out of scope of this article as it requires many steps and compliances to register. Also it requires much higher budget to form. If you want to know about the registration process and incorporation of a Public Limited Company click here.

Why is it important to choose the right business structure?

Choosing the right business structure is important for several reasons:

  • Legal protection: Different business structures offer varying levels of legal protection for the owners. For example, a sole proprietorship offers no legal separation between the owner and the business, while a corporation offers complete legal separation.
  • Liability: The business structure you choose can also impact your personal liability. For example, if you operate as a sole proprietorship and your business incurs debt or is sued, you will be personally responsible for paying off those debts or damages. In contrast, if you operate as a corporation, your personal assets are generally protected in the event of business debts or lawsuits.
  • Taxes: The business structure you choose can also affect your tax obligations. Different business structures are taxed differently, and some structures may offer tax benefits or drawbacks compared to others.
  • Compliance: Different business structures have different compliance requirements, such as the need to hold annual general meetings or appoint an auditor. Choosing a structure that aligns with your business goals and resources can help you avoid unnecessary compliance burdens.
  • Potential for growth: The business structure you choose can also impact your ability to raise capital and expand your business. For example, a corporation may be better suited for raising capital through the sale of shares compared to a sole proprietorship.
  • Foreign Direct Investment: If you are considering going global and considering to collect funds from foreign investors then you have to consider an Limited Liablity Partnership Firm or a Private Limited Company or a Public Limited Company

choosing the right business structure is an important decision that should be made with careful consideration of your business goals and needs.

If you are just starting out as a single business owner you can start with a Sole Proprietorship. The same goes for two partners. If two partners are just starting to out to do business, a Partnership Firm registration is all it takes to get started. What matters more is the business and the product rather than the shiny outfits of the corporate registrations. But if you really need the legal protection and recognization of an entity then you have to choose LLP or OPC or PVT LTD company. Sure they will be recognised as startups and can raise money or get your products recognizable, they take a lot to maintain. To get that shinny formal attire of a corporate structure you have to shell out a good chunk of money not only to get registered, but also to maintain, otherwise you have to pay a lot as penalties to the government.

How to Register a Company in India?

Registering a company in India in 4 simple steps

Company Registration Process in India

Step 1: Digital Signature Certificate (DSC)

Step 2: Director Identification Number (DIN) or (DPIN)

Step 3: Filing Forms on the MCA Portal

Step 4: Certificate of Incorporation

Documents required for Company Registration

Below are the general list of documents that need to be submitted for registration of LLP, One Person Company, Private Limited and Public Limited Company:

Documents of Directors of Company / Designated Partners of LLP

Proof of Identity:
  • Pan Card
  • Aadhaar Card
  • Driving license
  • Passport
  • Voters Identity Card
Proof of Residence:
  • Latest Electricity Bill
  • Latest Telephone Bill
  • Latest Mobile Bill
  • Bank Account Statement
  • Notarized Rent Agreement

Documents of Company / LLP

Proof of Registered Office:
  • Rent Agreement for Leased Space
  • NOC from Landlord/lady for Leased Space
  • Electricity Bill in case of Owned Space
  • Sale Deed of the property in case of Owned Space
Memorandum of Association (MoA) and Articles of the Association (AoA) for Companies and LLP Agreement for LLP.

The above mentioned documents are the generalized format that MCA asks that can change anytime. It is advised to talk to our Legal Expert for a complete set of documents required for Company Incorporation.

How Legalbae Helps in Simplifying Company Registration Process?

With the help of our Professionals and Legal experts, you can register a company in India in just 10-15 Days. Our professionals will help you in getting all the necessary documents as well as file all the necessary documents to start your business. Our Company registration plan includes

  • DSC for Directors or Partners
  • DIN or DPIN for Directors or Partners
  • Name Approval from MCA
  • Filing of SPICe+ form on MCA Portal
  • Payment of Stamp Duty for authorized capital upto a certain amount
  • Payment of Stamp Duty on LLP Agreement upto Rs.1000/-
  • Issuance of Incorporation Certificate along with Company PAN and TAN
  • Helping in getting Compliances right for newly incorporated companies and businesses
  • Opening of Current Account for your newly incorporated company

How to register new company in India through Legalbae?

Company Registration process from Legalbae is complete Online and is a 3-step process

Fill Form

Fill Form

Click on Get Started or call us.

Step 1

Upload

Upload Documents

Upload all the necessary documents.

Step 2

Certificate

Get Certificate

Get your Unique Incorporation Certificate.

Step 3

What is the Cost of Company Registration?

Plan Amount for Sole Proprietorship Registration - ₹999*

Plan Amount for Partnership Firm Registration - ₹999*

Plan Amount for LLP Firm Registration - ₹4999*

Plan Amount for OPC Registration - ₹6999*

Plan Amount for Pvt Ltd Company Registration - ₹6999*

* Prices shown above may vary depending on the authorised capital, additional fees, stamp duty and the number of directors and members. Please Click Here to contact our registration experts for complete pricing details

Summary

In summary, there are several company structures available in India, each with its own advantages and disadvantages. Businesses should carefully consider their needs and goals before choosing a company structure to ensure that they select the one that is best suited to their needs. Company registration involves a lot of steps and processes. So it is advised to hire a Professional to incorporate a company.

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