The best way to start a legal business in India is to incorporate a new company. It can be proprietorship, Partnership, Private Limited or Public Limited – depending on the volume and size of the business. The Indian Constitution provides us liberty to do so.
You may be opting to make your business registered. But you are not able to decide what type of Company Registration you need to do. In this case, we will advise you to look different types of company formation processes in this blog. Then, you will get your basic idea to incorporate your new company and make progress.
Types of Company Registration Processes in India
Private Limited Company Registration
Small or medium businesses can be registered as Private Limited Company. Most of the legal businesses in India fall in this group. There are three types of Private Limited Company in India.
- Limited by the Shares (Company)
- Limited by the Guarantee (Company)
- Unlimited Company
For Private Limited Company Registration, you need to show minimum 2 members/shareholders and 2 Directors. The Director and Shareholder may be the same individual. Liability of the members will be determined with the numbers of shares possessed by them.
Public Limited Company Registration
If your business is huge in terms of volume and capacity, then you can register it as Public Limited Company. Getting investment to grow it is very easy as you can sell the shares of the Company to the common people via stock exchanges.
Public Limited Company registration is require at least 7 members/shareholders and 3 Directors. You also need minimum Rs 5 lakh as paid up capital to start Public Limited Company.
Nidhi Company Registration
Nidhi is a Sanskrit word which mean treasure. In a Nidhi Company only the members are allowed to take financial services like savings, deposits and credits. It is a part of Non Banking Financial Company (NBFC) section. You may not know that Nidhi Company enjoys its stature as a Public Limited Company.
But, Nidhi Company Registration process is quite simple although it is regarded as Public Limited Company. It also needs minimum 7 members and 3 directors to start with. Minimum share capital should be Rs 5 lakh.
Microfinance Company Registration
If you wish to enter financial service business sector, then you may choose to start with Microfinance Company (MFI). MFIs provide modest amount of financial services to the poor and underdeveloped chunks of the society. They can offer loans, deposits and savings opportunity.
In India, we have basically two types of Microfinance Company registration Process. One is for profit and another is non-profit. Non Profit MFIs are known as Section 8 Company.
Section 8 Company Registration
Section 8 Company is a non-profit Company falls under Microfinance sector. It promotes social and other causes like arts, sports, education, charity and many other social welfare schemes.
Section 8 Company Registration process is very easy. And you don’t need to follow tough compliance procedures to run it. Here is the list of benefits that a Section 8 Company can enjoy.
- Various Tax Exemptions,
- No Minimum Capital in Needed,
- No Stamp Duty is required,
- Donators are endowed with tax benefits,
- Enjoy the credibility as charitable organization.
Proprietorship Company Registration
This type of Company runs by a single person. The Proprietorship Company is not required to follow any specific rules and regulations. Proprietorship Company registration process is simplest and the compliance part is also minimal.
Although you do not need to registration for your Proprietorship Company, it is advisable to do the following enrollments, to work accordingly.
- Trade License (Shops and Establishment Act License)
- SME (small and medium enterprise) Registration
- GST Registration
Partnership Company Registration
This type of Company is government partnership act, 1932. Partnership Company is owned and managed by multiple individuals. This kind of business can run with or without any kind of registration.
Partnership Company Registration process require Legal Partnership Agreement. Here you need to declare the position and liability of all partners. The agreement will determine who will get how much profit from the Company.
One Person Company Registration
Like Sole Proprietorship Company, One Person Company (OPC) is also managed and supervised by a sole individual. But, it’s more than that. OPC is governed by the Companies Act, 2013. It can enjoy the status as a separate legal entity from its shareholder/member.
One Person Company Registration process is also quite simple. You need to have Rs 1 lakh (minimum) as paid up capital to incorporate your OPC.