To register for a company in India, one has to follow many rules, guidelines, and complex process. This is because the rules and laws keep changing and in 2013 the company act has been changed. Now the revised company act has been followed. As LICIT keeps its expert team updated with all latest law, it would be a wise decision to take help of LICIT for legal activities.
What are Different Types of Company Registration?
1. Private Limited Company’s Registration
A Private Limited Company Registration is very important part of the business or an individual in India. For registration of a Private Limited Company, a minimum two shareholder and two directories are required. A person can act as both, director as well as shareholder, but a corporate legal entity can be the only shareholder. Private Limited Companies are the small-scale business where the number of employees can vary from 50-200. Advantages of Private Limited Company’s Registration: (i) Limited liability: Limited liability: According to Apex private limited companies are treated as a single entity, making the company subject for all debts. (ii) Tax advantages: Liabilities are limited to directors/shareholders. Private Limited Companies pay corporation tax on taxable profits and are exempted from higher personal income tax rates. (iii) Finance and Resources: With adequate funding, your company can produce goods at a lower cost, thus increasing profits and customer satisfaction. (iv) Business Continuity: Private limited companies relish permanent succession because the company is its own legal entity. (v) Increase Brand Recognition (vi) Recommended option for startups and SMEs
2. Limited Liability Partnership
As per 2008 Limited Liability Partnership act, it enables entrepreneurs and professionals to work efficiently and have some or all partners have limited liabilities. The LLP states that the profit and loss will be calculated as per the ratio of investment of all partners.
Advantages of Limited Liability Partnership:
(i)Easy to Form: Easy to Form: Low cost of formation, Process to form LLP is very simple and is a great way to build a scalable business.
(ii)Liability: Both LLP and partners are separate entities and functions separately. LLP can sue in its name. The partners are not legally answerable to be sued for dues against LLP.
(iii)Taxation: LLP is also not subject to Minimum Alternate Tax and Dividend Distribution Tax. Remuneration to partners will be taxed as “Income from Business &Profession”.
(iv)Exemption from Audit: Exemption from Audit: Rule 24(8) exempt the LLP from the Audit of its accounts if its annual turnover does not exceed, Rs. 40 lakhs or its contribution does not exceed Rs. 25 Lakhs.
(v)Recommended for professional service providers and SMEs
3. Partnership Firm Registration:
Partnership firms are the most popular form of business in India. For this type of Company registration two or more individual comes together for the common business set up and share profit. Since partnership firms are very easy to start as it involves minimum cost and resources. It is widely popular among small and medium-size business. Advantages of Partnership Firm Registration: (i) Easy to Start: Formation of the partnership is easy. (ii) Minimum legal restriction: It is not subject to excessive legal restrictions; therefore it enjoys freedom in administration. (iii) Flexibility: Partnership business is flexible, as suitable changes can be easily introduced whenever necessary. (iv) Annual Filing NOT Required: A Partnership firm is not required to file its annual accounts with the Registrar each year. (v)Sharing of risks: Every partner bears the risks individually as it is easier compared to a sole proprietorship.
4. Sole Proprietorship Registration:
Till now there is no such procedure followed in India for registration of Sole Proprietorship Company. Hence, this is the simplest type of business which is owned as well as operated by the sin. One Sole Proprietor can hire employees to run their business. Advantages of Sole Proprietorship Registration: (i) Ease of formation: Starting a sole proprietorship is much fewer complex and much cheaper than starting a formal corporation. (ii) Tax benefits: The owner of a sole proprietorship is not required to file a separate business tax report. Instead, they will list business information and figures on their individual tax return. This can save additional costs on accounting and tax filing. (iii) Employment: Sole proprietorships can hire employees. This can lead to many of the benefits associated with job creation, such as tax breaks. Also, spouses of the business owner can be employed without having to be formally declared as an employee. (iv) Decision making: Domination over every business decisions remains in the hands of the owner. The owner can also completely transfer the sole proprietorship at any time as they feel necessary.
5. One Person Company Registration:
One Person Company is the latest type of business which is started and managed by a single entrepreneur with Limited Liability Protection. Advantages for One Person Company Registration: (i)Lesser Compliance Burden: An OPC is incorporated as a private limited company, But OPC has been provided with some exemptions and so have lesser compliance related burden. (ii)Liability: Limited Liability Protection to Directors and Shareholder. In case the company incurs any loss or debts then the shareholders can be required to pay the unpaid values of shares. (iii)Adequate safeguards: In case of death/disability of the sole person should be provided through the appointment of another individual as a nominee director. (iv)Easy to Get Loan: Every banking and financial institutions prefer to lend money to One person company rather than proprietary firms. (v)Tax Flexibility: In an OPC, it is possible for a company to make a valid contract with its shareholder or directors. Directors ‘can receive remuneration, can receive rent and you can earn interest are deductible expenses.
Why to Company Registration with LICIT?
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