Types of Company Registration in India

 

The organisational structure chosen by an entrepreneur will determine the amount of taxes he/she will be paying, the measures of compliances that owner has to follow and the eligibility criteria that must be fulfilled by the owner. Therefore, one of the most essential decisions an entrepreneur can make is selecting the kind of business registration to go for in India. Moreover, the legal system in Indian allows various kinds of companies to exist under different kinds of company registration. Scroll down to check different types of business forms and company registration.

Different types of Company Registration

Company registration is the most important process by which business owners incorporate or establish their company. Since in India there are quite a few types of companies, entrepreneurs have to make sure that they choose a business form that is appropriate for their operations. The Companies Act, 2013 lays down rules and regulation for different forms of company registration. Here’s a quick look at the list of forms of Business in India.

Private Limited Company

Pvt. Ltd. Companies are appropriate for small businesses that require registration as a private body. In this type of company, an association of shareholders distributes the liability between themselves to protect personal assets. The overall capital of this business types is the total of all the shares held by each shareholder of the company. Also, the personal assets and business assets of the shareholders are considered separate, allowing for enhanced protection and security. The shares of Pvt. Ltd. Company cannot be traded or transferred publicly.

Public Limited Company

In a Public Limited Company shares can be purchased by general public. In such form of business, there is no fixed limit on the number of shares that can be traded. Since the company shares are listed on the Stock Exchange, they can be freely traded, making the shareholders part-owners of the company. Public limited company is required to obtain a Registration Certificate from the Registrar of Companies before starting business operations.

Partnerships

In such type of business form, the operations of the company are handled by partners, who have decided to their role and share profits and losses. Therefore, the functions, powers, duties and number of shares held each partner is all clearly defined in a Partnership Deed. Moreover, Partnership firms are registered as per the Indian Partnership Act, 1932. Partnership firms can function with or without registration as long as they have a legitimate and registered Partnership Deed. Though, most partnership firms register themselves as that offers them additional rights.

Limited Liability Partnership

Limited Liability Partnership or popularly known as LLP, LLPs are a new type of business form in India. Furthermore, LLPs enjoy a separate legal status, helping differentiate between personal assets and business assets, and allowing entrepreneurs limited liability protection. In such partnerships firms, the liability of each partner depends on the share capital, providing more protection as compare to Sole Proprietorship.

One Person Company

The most recent entry into the different forms of company registration in India, One Person Companies are considered better form of business for small businesses. OPCs became a part of the Companies Act 2013, to facilitate entrepreneurs who wish to own and run a business independently. Since OPCs has separate legal status, entrepreneurs have the benefit of limited liability protection with no partner. Additionally, since OPCs have only one individual so the registration process is easy to incorporate and regulate. Additionally, this effectively serves as a combination of the Company model of business entities and Sole-Proprietorship.

Sole Proprietorship

This is another business form in which a single individual owns and handles the business operations. However, in Sole Proprietorship, the owner and the company are considered as a single entity, making them exclusively responsible for profits and losses of the company. Furthermore, since the registration has the name of the owner, tax filings and accounting reports will also have the name of the owner, which leads to unlimited business accountability. Consequently, Sole Proprietorship does not have a separate process registration.

Section 8 Company

Section 8 Company or commonly known as Non-Profit Organisation (NGO), such companies mostly work for charitable purposes. Furthermore, section 8 companies are involved in promoting science, literature, education, arts and caring for the underprivileged section of the society, and also in protecting the environment. All the profits generated by section 8 companies are utilized to achieve the objectives of the company. 

Conclusion

Company registration is the most important process by which business owners incorporate or establish their company. One of the most essential decisions an entrepreneur can make is selecting kind of business registration to go for in India. Moreover, the legal system in Indian allows various kinds of companies to exist under different kinds of company registration.