Summary: Company Registration is a good step if properly planned registered. But, now you say, the Company Registrations is Costly?. Find out why Company Registrations is best.
You’ve probably noticed Private Limited, Limted Company written at the end of the company or you have been worked with Private Limited. These Pvt or Ltd. are Registered Companies in India and there business are very well verifiable at public database of Mca website mca.gov.in
An effort have been made to find out the best options before coming into company formation.
So, which is better, Proprietorship? Partnership? Pvt. Ltd? OPC company? Nidhi? What type of license like Fssai? ISO? Startup? What is the cost? Let’s sit down and talk about it.
The Benefits under Company Registration
The directors and shareholders of the company have no personal liability towards of any unfortunate event happens like, business loss, failure in the business.
Hence Registered Company protects the personal assets of the directors, shareholders in the unfortunate event which is not in control with anybody.
Legal Entity status or Recognition:
The registered company like, Private Limited or Limited Company, LLP, Nidhi company, exists separate from its directors or Members, Registered company status enables you to taken more seriously than other unorganized business like firms.
Operations of Registered company gives more confidence to the suppliers, Bankers who will prefer to dealing with Registered companies.
Easy to attract to talented workforce and achieve strategic goals through employees by designating wide range of positions like Executive directors, operation directors etc.
Existence of the company remains forever:
One of the popular saying that, Directors or promoters may come and go, but the existence of the Company remains forever. it has separate Legal existence from the eyes of law.
Once company registered it remains alive, until it’s closed down as per Companies Act, 2013.
The death of the promoters, directors does not affect the continuity of the company.
Big Project cost and Risk factors:
For businesses which needs high capital outflow, usage of hi-tech systems, wherein financial stake is high, Banks and financial institutes prefer the Registered company and insist to have legally registered company.
Directors, management of the company can easily transfer there stake from one to another, This will saves time, money of the business owners, and saves big amount of stamp duty.
In the company form of business, separate share-hodlers agreement can be executed between company and with its Directors, promoters etc.
It’s also possible, the promoter become an employee of the company and draw salary.
The person at the same time become, Shareholder, director, employee, creditor of the company example:
As a company, it has better avenues for borrowing of funds to business. It can issue Debenture certificates, private placement, issue of preference share capital etc. accept deposits from public, even it borrow money from banks, as they prefer to lend to Companies rather than Firms and proprietorships.
Payment of tax is only on the net-profit, the taxable net-profit arrived after offsetting all types of expenses, salary to directors, reimbursement etc, which reduces the net taxable income drastically and result is minimal or lower tax on the company Net profit.
Raising money from Public:
Limited companies can raise large amount of capital from public by issue of shares and deposits. Private companies raise capital from issue of debentures, private placement etc.
Maintenance – cost:
For the amount of money you spend, to manage the company compliance is depending upon the company Turnover and invested capital, license you required, but keeping company with good compliance, certainly get good will out of market. Think of the per-year cost of compliance cost ranges from INR 8,000-50,000 depending upon the turnover, paid-up capital of the company.
Types of Companies:
The most preferred Company in the industry is Private Limited, which enables business to start quickly with minimal procedure, minimum 2 people can start this as promoters cum Directors can start a private company within 3 days of time. It enjoys all those company benefits with seamless business across the industry. The maximum number of promoters or shareholders allowed under Pvt is 200 only.
as the name suggest, its one person Shareholder company, where the business owner control is with one person only, all the benefits exists from Company can be utilized under OPC, the restriction under OPC is the maximum turnover limited to 2 Crore only Ltd or Limited company
Under the limited company, where there is no limit in the number of shareholders to join, where business looking large-scale operations, and big chunk of cash resource from public, LTD company is ideal. The minimum director criteria is 3 directors and 7 promoters to format the public company, which has wider capital access.
The Limited Liability Partnership Firm (LLP), is an advancement of traditional Firm and few characteristic of Company, the LLP Registration cost and Maintenance is quite cheap compared to other types of Registration.
The LLP’s type of business is ideal, where the business purely on service oriented and risk sharing is quite high. The main disadvantage under LLP’s is, the public perception about capital pooling from Banks and financial institutes. We recommend LLP for small service providers, consultants, freelancers, professional service providers who intend to avail the various benefits.
Llp registration in Bangalore, Karnataka can be done within 5 working days.
To run the financial institution within in the group of members, Nidhi business is ideal.
Members of this group, make deposit, borrow money for there mutual benefits. As per section 406 of the companies Act, 2013, nidhi Company is not required to comply on the RBI.
Its purely for social welfare, education, healthcare, you can start with the main objective of public service, social reforms as per there deed signed between the settlors and management.
If you have a Registered NGO, with 80G and 12A registration, then you can list for the Corporate social responsibility(CSR) fund pooling eligibility from the corporate world.
Types of License Required:
The Fssai registration is must, where the objective of the business is to do hotel/ food industry, retail of food items, selling in online market like Zomato, Swiggy. The Fssai License cost is based on the business turnover, the basic cost for License cost starts from Rs.2500 for the business turnover up-to Rs.11 Lac.
The Government, to promote the business and industry, the startup India scheme has been rolled out. The registration is voluntary. This gives host of benefits under startup like tax benefits for 3 years, easier compliance, IPR benefits, bank loan subsidy, etc.
in Karnataka, every business shall make shops and establishment registration, The registration is online by login into ekarmika enables for access of registration with few documents. The Government fee to get registration is based on the total number of employees. For Zero employees the cost is Rs.300 only.
In Karnataka, if you have business carrying any business which has been listed under X of Karnataka Municipal Corporation Act, are mandatorily required to obtain Trade License from BBMP. Business are commonly covered under Trade license are: Food processing units, Hotels, Marriage halls, nursing homes etc., Trade license cost is based on the location, total measurement area of the business.
If you have employees for 20 and above, then PF and ESI registration is compulsory. The PF can register voluntary basis even the employee count is less than 5 numbers for the benefit of retirement benefits. There is no Government fee for registration of PF and ESI
It is levied by State Government, PT is must be registered the person who is engaged in the business or services. The yearly PT renewal cost is Rs.2500, and the employees salary if exceeds Rs.15,000 per month, has to pay Rs.200 as PT.
It’s a certificate about the quality management system followed by a Company. it’s a voluntary Certificate and it brings attention the customer about the quality management, continual improvement, process approach. The cost of the ISO certification starts from Rs.3000.
Minimum Requirement for Formation Companies:
Minimum paid up capital of private company
Capital can start from INR 1 to no limit based on your business requirement
List of Directors as per Company structure and there shareholding pattern
Legal papers like director KYC documents
Documents and procedure:
After you choose a form of business you want to start, then below documents required.
Time for Registration
Once all those documents, then need to file with company registrar (MCA) and get the Registration online within a 5 working days.
Mca registered company
Ministry of Corporate Affairs is the custodian and issues the Certificate of Registration within 3 working days from submission of complete records
Registered Company Wins
When it comes to goodwill in general public, other stake holders, registered companies obviously wins out.
If you have any questions before starting the best business type of company, please reach teamIN Filings to answer on phone: 7019827351, team@teamIndia.co.in