The organizational structure you choose will determine the taxes you pay, the compliance measures you must follow, and the eligibility criteria you need to meet. Therefore, the most important decision an entrepreneur can make is deciding what type of business to register in India. Additionally, the Indian overall set of laws permits various sorts of organizations to exist under various kinds of organization enlistment. In this blog, we will take a look at different types of business organizations and types of company registration.
Types of company registration
organization enlistment is the essential interaction by which entrepreneurs set up or consolidate their organization. Since there are many types of companies in India, entrepreneurs have to make sure that they choose the type of business that suits their business. The Companies Act, 2011 in India provides guidelines for various types of company registration. So, here’s a look at the business type list for India.
Private limited company
Publicly owned company
Partnership
Limited Liability Partnership
One Person Company
Monopoly ownership
Section 8 Company
We will now take a look at the different types of companies and their registration process in detail.
Private limited company
Private limited company registration in Chennai suitable for small businesses that need to register as a private entity. In this type of company, the group of shareholders shares the responsibility to help protect their personal assets. The total capital of such business types is the total amount of all shares held by each member of the company. Also, the personal and business assets of the members are treat separately, which leads to better security and safety. Shares of such company cannot be trade or transfer in public. To be eligible for such business registration, a private limited company must meet the following criteria as per the Companies Act, 2011 per;
Minimum two and maximum fifteen directors
Minimum requirement one director – Indian resident
A minimum of two and a maximum of 200 shareholders or members
In addition, an authorized capital fee of at least INR 1 lakh
Must have registered office fee address in India
Types of private companies
Limited by shares: In such private limited company in Bangalore, the liability of the members is determine by the memorandum for the unpaid amount on the shares allot to them.
Limited by Guarantee: In this case, the liability of the members is limited, by the memorandum of the amount of the members, to pay or guarantee if the company goes bankrupt.
Unlimited: Moreover, such business organizations have no limits on the liability of its members. Consequently, if the company’s assets fail to pay creditors, members will have to use their private assets to clear debts, which will increase the risk factor involved.
Public limited company registration
A public limited company is one whose shares can be purchase by members of the general public. In such business entities, there is no limit on the number of shares that can be sold or trade. Since the company’s shares are listed on the stock exchange, they can be trade free of charge, making the shareholders share-owners of the company. Such companies are required to obtain a certificate of registration from the ROC before starting business operations. In addition, in order to be eligible for such business registration, a public limited company must meet the following criteria as per the Companies Act,
one director must be an Indian resident
seven shareholders without cap at the maximum limit
In addition, an authorized capital fee of at least INR 5 lakhs
Next, there must be a registered office fee address in India
In such business organizations, operations are manage by partners who have agree on their role and profits. Therefore, the functions, duties, powers, and number of shares are all clearly define in a verbal agreement know as a partnership deed. In addition, these businesses fall under the purview of the Indian Partnership Act, 1932. Partnership companies may operate with or without a license, as long as they have a valid and registered partnership deed. However, most partners register themselves because they get additional rights. Moreover, in order to be eligible for this type of firm registration, the partnership must meet the following criteria;
A minimum of two and a maximum of ten partners
In addition, there must be a registered office fee address in India
In addition, there must be a Registered Partnership Deed sign by all partners
Limited Liability Partnership
Popularly known as LLP, Limited Liability Partnership also a new type of company in India. Moreover, it acquires a distinct legal status, helps differentiate between personal and business property, and gives entrepreneurs limited liability protection. In such payee types, each partner’s liability is based on the number of share capital, helping to provide more security than sole proprietorship. Moreover, to be eligible for this type of business registration, the LLP must meet the following criteria;
Minimum authorized capital of Rs 1 lakh
At least one of the designated partners must be an Indian resident
No cap on at least two partners and maximum number
Not necessarily for shared capital as each partner must have a agreed contribution
One Person Company
With a variety of company registrations allowed in India, OPC is best for small businesses. In addition, it became part of the Companies Act 2013 to help entrepreneurs who want to run a business alone. Due to the different legal status of such a firm, the entrepreneur gets the benefit of liability protection without having to partner with anyone else.
Minimum authorized capital of at least INR 1 lakh.
Next, a person should be a natural Indian citizen and resident
The promoter must appoint the nominee during the insertion
In addition, financial businesses cannot be include as an OPC.
In addition, if the paid-up capital is more than INR 50 lakhs or the turnover is more than 2 crores, it should be converted into a private limited company registration
Monopoly ownership
This is another type of business entity in which a single person handles the move of the business. However, in this pay type, the company and the owner are treat as the same entity, making them fully responsible for the profit and loss. In addition, the registration contains the owner’s name, so tax filings and accounting reports will also take the owner’s name, leading to unlimited business liability. As a result, this type of company does not have a separate business registration process.
Section 8 Company
Commonly called non-profit organizations, such companies operate primarily for charitable purposes. In addition, it includes arts, science, literature, education, care for the needy and protection of the environment. Also, all profits generate by such companies are intend to achieve these purposes, and members do not take dividends for themselves. To be eligible for such pay firm registration, a Section-8 company must meet the following
two directors and they can shareholders
one director must be an Indian resident
There is no minimum capital requirement
In addition, there must be a registered office fee address in India