Steps To Be Taken
To Incorporate A
New Company
There are five main types of companies you
can register in India
• Sole Proprietorship
• One-person Company
• Partnership Company
• Limited Liability Company
• Private Limited Company
2
1
Sole
Proprietorship
Sole Proprietorship
“
The sole proprietorship is the easiest form of company registration in
India. One person manages sole ownership, i.e., a sole proprietor. If you
are looking to have full control of your business, this option serves ideal.
Key advantages of the sole proprietorship
▸ No government registration required
▸ No compliances to be fulfilled
▸ No government regulatory paperwork
▸ All profits earned are yours
▸ You do not require double taxation
▸ Pay income tax returns only on your income
4
Sole Proprietorship
The documents required for Sole
proprietorship registration
▸ Utility Bill of the business location
▸ KYC documents of the Bank
▸ A license issued by the Shops and Establishment Act
▸ Details of Income Tax Returns of the Proprietor
▸ Address proof of the registered office
▸ Bank account details
▸ PAN Card
▸ Aadhaar Card
5
Sole Proprietorship
The process for registration of a
sole proprietorship firm
▸ Step 1: Obtaining PAN
▸ You need to apply for obtaining the Permanent Account Number or PAN from the government to be able to run your business.
▸ Step 2: Name your business
▸ You should always opt for a name for your entity which clearly defines the purpose of your business and is unique. Also, you need to pay attention
that the name you are choosing is not in use by any other business.
▸ Step 3: Opening Current bank account and entity registration
▸ Then you need to open a current bank account in the name of your entity. However, as there is no requirement for formal registration, you can go
for other government licenses as per the legal requirements of your business.
▸ Step 4: Registration under MSME
▸ Although it is not necessary, you can go for MSME Registration or SME Registration under the Micro, Small and Medium Enterprises
Development Act, 2006. Getting registered under the MSMED Act can help you take benefits from the government schemes for such enterprises.
▸ Step 5: Getting GST Registration
▸ You can also get GST Registration if the turnover of your business exceeds the limit for the same in your respective state.
6
2
One Person
Company
One Person Company
A new type of business structure called One Person Company (OPC)
was introduced by the Indian government in 2013. Until 2013, a single
“
person could not incorporate a company, you needed to have a
minimum of two directors to do that. But why would you need to
incorporate a company if you are an individual instead of just going for
sole proprietorship?
Other benefits of a OPC
▸ Lesser compliance compared to a private limited
▸ Limited liability for directors (meaning the owner’s personal assets
wont be at risk in the event of an unfortunate event)
▸ Legal Recognition
▸ Makes it easier to get loans from banks
▸ Complete control of the company
▸ Easy to manage
8
One Person Company
The documents required One Person
Company Registration
1. Identity Proof Of The Director And Nominee
You have to submit an identity proof of the director and nominee. It can either be their
voter card, aadhar card, driving license, PAN card, etc.
2. Memorandum Of Association (MOA) And Article Of Association (AOA)
Both of these documents are very important and submitted during the registration process.
Make sure to highlight all the objectives of your company before submission.
3. Consent Of The Designated Nominee
As discussed earlier, one director and a nominee are required to start an OPC. In case of
any mishap, nominee has the authority to take place of the director so that the working of
the company won’t be affected. The consent of the designated nominee is filed through the
form INC-3. Nominee too has to submit his/her PAN card and Aadhar card for
proceedings.
9
One Person Company
The documents required One Person
Company Registration
4. Affidavit Of Nominee And Director
The designated director and nominee have to submit their affidavit in form INC-9 and DIR-2
5. Residential Proof Of The Office
Residential proof of the place where business activities are performed is submitted at the time of registration. It can be any
utility bill (electricity, gas, telephone) not older than two months attached with the proof of ownership along with a No
Objection Certificate. In case you are working on a rented property, you will have to submit the rent agreement along with
all the documents.
6. PAN Card
A copy of the PAN card of the director and nominee would be submitted during the OPC registration process.
7. Passport Size Photographs
Passport size photographs of the designated director and nominee would be attached along with the form.
8. DSC And DIN
Both these documents are essential for the OPC registration purpose. DSC is used to sign the online documents while DIN
provides a unique identification number to the director.
10
One Person Company
The process for registration of a
One Person Company
▸ Obtain Digital Signature Certificate (DSC)
▸ Obtain Director Identification Number (DIN)
▸ Apply for Name Approval
▸ File all forms with Ministry of Corporate Affairs (MCA)
▸ Collect your certificate of Incorporation
11
3
Partnership
Firm
Partnership Firm
If you decide to have partners in your business, the easiest way to go
ahead with is to create a partnership firm. All you need is a partnership
“
deed which is an agreement between the partners. This agreement will
contain all the duties and obligations between the partners and how
profit will be shared.
Benefits of partnership companies
▸ Easy and convenient to form
▸ Risk is shared between partners
▸ No need to submit annual returns to the MCA
▸ Statuary Audit is not mandatory
▸ Easy to wind up
▸ Flexibility
13
Partnership Firm
The documents required for
Partnership Firm
1. Partnership Deed
Partnership deed is a kind of agreement formed within the partners which defines their rules, duties, methodology, functions
and shares. It helps to avoid future conflicts and disputes between the partners. It is created and signed by all the members on
the Judicial Stamp Paper that costs around Rs. 2000/-
2. PAN Card
All the designated partners of the firm are required to submit their PAN cards as a proof of their identity.
3. Address Proof
All the partners have to submit a copy of their address proof which can either be their aadhar card, voter id, ration card, driving
license, etc. The address and details given in the document should match PAN card details.
4. Office Address Proof
Address proof of the respective working place has to be submitted. In case of rented property, an applicant has to submit a rent
agreement along with a utility bill such as electricity, water, gas bill, property tax bill, etc. Apart from it he/she has to submit
the No Objection Certificate or NOC from the landlord. If the place is owned by any partner or partners then the applicant has
to submit a utility bill along with a NOC.
14
Partnership Firm
The process for registration of a
Partnership Firm
Select An Appropriate Name For The Firm
▸ Select a name for your firm that is unique and should not have words like emperor, empire, crown, empress or any
other words which show sanction or approval of the government.
File An Application
▸ First of all, the applicant has to file an application in Form 1 of partnership firm registration. An application is filed
with Registrar of Firm of the respective state where the firm is located. The application is filled in prescribed format
along with specific fees amount.
Preparation Of Partnership Deed
▸ Partnership deed is prepared with the consent of all the partners on the stamp paper. Below Given Components Are
The Parts Of Partnership Deed:
▸ 1. Details of the partners and firm such as their name, address, qualification, etc.
▸ 2. Nature of the firm or business activities involved
▸ 3. Capital contribution made by all partners
15
Partnership Firm
The process for registration of a
Partnership Firm
▸ 4. Shares/Interest of all the partners
▸ 5. Profit/loss sharing ratio among all the partners
▸ 6. Rights, duties, salaries, commissions, or payable amount of the partners
▸ 7. Details of loans provided by the partners
▸ 8. Circumstances or process that would be followed in case of death or retirement of any designated partner
▸ 9. Other clauses made with mutual consent of all the partners
Submission Of The Documents
▸ Submit all the prerequisite documents along with the partnership deed you have prepared.
Verification Of Documents And Issuance Of Registration Certificate
▸ After submission, documents are closely verified by the authorities. If everything falls under the provisions of act,
registration certificate is issued to your firm.
16
4
Limited Liability
Company
Limited Liability Company
Limited Liability Company(LLC) takes advantage of other business
structures corporation, partnerships, and sole proprietorship. Limited
“
Liability Company is entitled as flexible business structures, and LLC
separates personal and business liabilities. Every owner will have their
tax liabilities shared.
Key advantages of LLC
▸ The paperwork in LLC is much lesser as compared to other
registrations. This makes LLC more flexible and easier to form.
▸ LLCs keep their members safe from the liabilities like personal debts
and legal hearings.
▸ It also provides tax flexibility where the income, expenditures, and
profits become the part of owner’s tax returns.
▸ In LLCs, one does not have to necessarily follow a business structure
to run one’s organisation.
▸ Profit sharing is also flexible in LLCs
18
Limited Liability Company
The documents required for
Limited Liability Company
Documents Required From The Partners
▸ PAN Card
▸ Identity Proof
▸ Residence Proof
▸ Passport size Photographs
▸ Copy of Passport
Documents Required From The Firm
▸ Residential/ Address Proof
▸ DSC or Digital Signature Certificate
19
Limited Liability Company
The process for registration of a
Limited Liability Company
Obtain A Digital Signature Certificate
▸ The first step in the process of LLP registration is to obtain the DSC for a designated partner of the firm. DSC is important
because LLP registration is an online process and all the documents are to be signed digitally. The designated partner has to obtain
their DSC from the government recognized agency. The cost may vary from agency to agency. Make sure to obtain a class 3 or
class 2 DSC certificate.
Obtain A DPIN For All The Partners
▸ DPIN or Designated Identification Partners Number is mandatory for all the designated partners of the limited liability partnership
firm. Form DIR-3 is filed to obtain DPIN. The applicant has to attach a scanned copy of Aadhar card and PAN card along with the
form which should be signed by the company’s secretary or by the Managing Director/CFO/CEO of the limited liability
partnership firm in which he/she is appointed as a director.
20
Limited Liability Company
The process for registration of a
Limited Liability Company
Firm’s Name
▸ The third step under LLP registration is reserving a name for the limited liability partnership firm. For that, an applicant has to file
LLP-RUN form. The name should be unique and non-offensive. For this, you can use the free name search facility available on the
MCA Portal. The system is quite helpful and provides a list of names resembling with your firm’s name. This would help you to
select an appropriate name. An applicant can provide up to 2 names that would be further analyzed by the registrar of companies.
In case of rejection/objection, you can re-submit your form after 15 days of the rejection.
Firm’s Incorporation
▸ Once the name has been reserved for the limited liability partnership firm registration you can move ahead to the incorporation of
your LLP. For this, you have to file FiLLiP i.e. Form for incorporation of Limited Liability Partnership. It is filed with the registrar
of the firm of the respective state in which the registered office is situated. Applicant has to pay a particular amount of
incorporation fees as per the Annexure “A”.
All the documents and applications are duly checked by the authorities and if all goes well, incorporation certificate is issued
21
Private
5
Limited
Company
Private Limited Company
A Private Limited Company aka LTD is a type of company that has a
minimum of two and a maximum of 200 members. As the name
“
suggests, it cannot raise the funds from the public, which means the
company cannot publicly issue the shares. There is no paid-up capital
required now to set up an LTD.
Some benefits of having a private limited company
▸ The liability of the company’s owner with respect to the company’s
debt is only limited to his/her shares.
▸ The shares of the company are easily transferrable to the other person.
▸ The company can issue debentures and can receive funds from public
platforms, thus making it easier to raise the money.
▸ There are more tax benefits in LTDs and the percentage of applied tax
is also lesser as compared to other types of company registrations.
23
Private Limited Company
The documents required for
Private Limited Company
▸ The Articles of Association
▸ Memorandum of Association
▸ Declaration by the subscribers and by the directors
▸ A confirmation for the address of the office
▸ Two months utility bills copy
▸ Certificate of incorporation of the Outer Country body corporate [If applicable]
▸ A resolution passed by the global Company [If applicable]
▸ A recommendation declared by the promotional Company [If applicable]
▸ The interest of the directors from other entities [If applicable]
▸ Nominee’s assent
24
Private Limited Company
The documents required for
Private Limited Company
▸ Identity proof and residential address of the subscribers and the nominees
▸ Identity proof and residential address of Applicants
▸ The Declaration/Resolution of the unregistered companies
▸ Any other document [If required]
▸ Proof of principal place of business
▸ Evidence of appointment of Authorized Signatory for GSTIN
▸ Either of the documents– Letter of Authorization/Copy of Resolution passed by BOD
▸ Managing Committee and Acceptance Letter
▸ Proof of identity of Authorized Signatory for the opening of a bank account
▸ Proof of address of Authorized Signatory for the opening of a bank account
▸ Specimen Signature of Authorized Signatory for EPFO
25
Private Limited Company
The process for registration of a
Limited Liability Company
▸ Part A:
Name Reservation (Applicable to New Companies only)
▸ Part B:
▸ Company Incorporation
▸ Application for DIN
▸ PAN Application
▸ TAN Application
▸ GSTIN Application
▸ EPFO Registration
▸ ESIC Registration
▸ Profession Tax Registration
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concepts
Yellow Blue Red
Is the color of gold, butter and ripe Is the colour of the clear sky and the deep Is the color of blood, and because of this
lemons. In the spectrum of visible light, sea. It is located between violet and green it has historically been associated with
yellow is found between green and on the optical spectrum. sacrifice, danger and courage.
orange.
Yellow Blue Red
Is the color of gold, butter and ripe Is the colour of the clear sky and the deep Is the color of blood, and because of this
lemons. In the spectrum of visible light, sea. It is located between violet and green it has historically been associated with
yellow is found between green and on the optical spectrum. sacrifice, danger and courage.
orange.
34
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resources
Illustrations created by
Sergei Tikhonov.
Free illustrations published
under the MIT License. You
can use them for personal
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without the need to include
attribution.
See license.
42
Extra
resources
Illustrations created by
Sergei Tikhonov.
Free illustrations published
under the MIT License. You
can use them for personal
and commercial projects,
without the need to include
attribution.
See license.
43
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