Company registration- The organizational structure you choose will determine the taxes you pay, the compliance measures you must follow, and the eligibility criteria you must meet. Therefore, one of the most important decisions an entrepreneur can make is deciding what type of business to register in India. Moreover, the Indian legal system allows different types of companies to exist under different types of company registration. In this blog, we will take a look at different types of business organizations and types of company registration.
The most important thing to deal with when starting your own business is to complete legality to ensure the smooth running of your business organization. Company registration is the first step in the process that gives you the legal authority to do business. It follows a set of rules and regulations prescribed under the Companies Act.
Company registration is a primary process that all business owners need to complete. The Companies Act 2013 lists various types of companies that can be included in India.
So before you go through the company registration process, take a look at the different types of companies in India that you can register.
Private Limited Company
A private limited company is a business registration by a private private entity for small businesses. According to the provisions of the Companies Act 2013, a company can have a minimum of 2 members and a maximum of 200 members. In this form of company, there is a group of shareholders and the total capital is made up of shares held by each member.
In a private limited company, the liability of the members is limited to the number of shares they hold. Commercial assets and personal assets are considered separately. Shares of a private limited company can be sold or transferred to a person who in turn becomes the owner of the company. However, the shares cannot be traded in public. A private limited company can be classified on the basis of:
A) Company Limited by shares
This is the most common form of a private limited company. Here the liability of the members is limited, if any, by the Memorandum to the amount paid, respectively, on the shares they hold.
b) Company Limited by Guarantee
In this type of private limited company, the liability of the members is limited by the memorandum to such an extent that in case of bankruptcy, the members can contribute to the assets of the company respectively.
C) Unlimited company
In this form of company, there is no limit to the liability of the members. This suggests that in the event of a loss if the company’s assets are underpaid to the creditors, the private assets of its members eat up for the clarification of the debt. The risk factor here is very high.
Public Limited Company
Ordinary people can buy shares of a public limited company. The company must have 3 directors and at least 7 shareholders. In a public limited company, there is no limit on the number of shares.
Shares are listed on the stock exchange and can be traded free. Such companies are owned by their shareholders. Companies in this category require a certificate from the Registrar of Companies (ROC) of the company before starting their business operations.
This is one of a variety of companies where business transactions and operations are managed by partners. The legal partnership agreement clearly defines the obligations, roles and number of shares held by two persons. Profits or losses incurred by the business are shared among the partners as stated in the agreement. Therefore, company registration in palladam is an important and crucial step to make your dreams of becoming a successful entrepreneur come true. Use the information here and get started!
One Person Company (OPC) is the latest entrant among the various types of companies registered in India. It was introduced under the Companies Act 2013, in favour of entrepreneurs who have the ability to run a business successfully, albeit alone. The minimum paid up capital of shares in OPC registration in chennai is INR 1 lakh.
This new addition to various types of companies in India was a pleasant change as it allowed one person to handle the company affairs while other types of companies required at least two persons to work as a member in any company.
It is very beneficial for small business owners who do not need partners. In many ways, the OPC is treated as a separate legal entity by its members. The shareholders here have limited liability security and this form of company is fairly easy to incorporate.
Sole Proprietorship is a form of company registration in tirupur in which a single person manages the entire business. The business and the owner are considered as an identity and then the profit or loss made from it is fully borne by them.
In proprietorship the company is registered in the name of only one person. All accounting is done under the owner’s account for tax purposes. Proprietors here have to bear unlimited business liability.
Limited liability partnership
A limited liability structured company (LLP) requires at least two partners. It is also a newly introduced corporate business structure that combines the two terms ‘company’ and ‘partnership pay’. An LLP is a separate legal entity from a partnership and separates personal and business assets.
The liability of the partners is determined by the number of their share capital. When comparing sole proprietorships and partnerships, LLP shows better credibility among its investors. This is due to proper maintenance of investment records, financial records and tax records.
Section 8 Company
This type of company is registered as a non-profit organization (NPO). The purpose of the NPO is to promote various forms of arts, commerce and social welfare in the form of education, charity, religion and protection of the environment, to name a few. Any profit, if generated, is used to achieve its above objective. Dividends are also not paid to its members.
In India, no business will be considered as a registered company if it is not registered with the Registrar of Companies under the Companies Act 2013. Only after registration does a company become a separate legal entity from its members. To know more about private limited company registration in tirupur, click here.