What are the Benefits of Company Registration in India?
In India every day many companies are registered. Whether it is registered as a private, public, or LLP company. If you are thinking of establishing a new company then it’s become important to register it on a government website. After registering your company, you can avail various benefits offered by the government. In the past time registering a company was a time-consuming process but today it’s become easy and simple by online registration.
Benefits of Company Registration in India
Limited liability
By registering your company, you can avail the benefit of limited liability. The liability of the shareholders is limited to their shareholding in the company. If your company faces any financial and legal issues your assets will be safe and secure.
Separate Legal Entity
Having your company registered with the Government. It will provide your company with a separate legal entity from its shareholders. Your company can be involved in contracts, own assets, and sue or be sued in its name, separate from the shareholders.
Ease of Raise Funds
For a registered company, it’s become easy to raise funds. Company registration increases the credibility of the entity and also enhances its reputation in the market. You can easily get shares, bank loans, and investors for your company.
Credibility and Trust
Being a registered and regulated entity, a Private Limited Company(pvt.ltd) increases the credibility and trust among customers, suppliers, and other stakeholders. It is often perceived as a more reliable and professional business entity, which can be advantageous for building a strong reputation in the market.
Tax Benefits
You can avail of various tax benefits and incentives offered by the government in India including tax deductions on business expenses, exemptions on capital profits, and low tax rates for small entities. This helps you to pay less tax for the company and its shareholders.
Confidentiality and Privacy
It offers privacy and confidentiality in the company. You cannot disclose the confidential information of the company such as the shareholders or directors and their shareholdings with the public. It is important to maintain the confidentiality of the business operation and strategies.
Good Management Control
Private limited companies allow for making strong decisions and greater control over the management and operations of the company. The shareholders can appoint directors and managers who can efficiently manage the day-to-day activity to enhance the business.
Employee Motivation
Registered companies often offer employee stock option plans (ESOPs) to attract and hire talented and skilled employees. It allows the employees to become shareholders of the company, aligning their interests with the overall success and growth of the business.
Ease of Ownership Transfer
Shares in a registered company become easy to transfer or sell to other individuals or entities, providing flexibility and ease of transferring ownership.
Perpetual Existence
If the company owner dies, retires, or leaves the company. The company will not be affected by this as it continues to work as it is working.
Different types of Companies in India
Sole Proprietorship:
A sole proprietorship is owned and controlled by a single Person. It's ideal for small-scale businesses with low income. The owner has complete control over the business's operations and gets both its benefits and losses.
One Person Company (OPC):
One Person was established in the year 2013 in India. It is ideal for solo entrepreneurs who want to start a company. Under the Companies Act of 2013, it permits a single owner to run a business while being part of the corporate structure and it is suitable for small businesses with low capital.
Partnership Firm:
Partnerships involve two or more persons who share profits and losses equally in the business. Governed by the Partnership Act of 1932, it's suitable for small ventures with multiple owners with low capital.
Limited Liability Partnership (LLP):
An Limited Liability Partnership (LLP) is a separate legal entity where partners' liabilities are limited to their agreed contributions. It's initiated under the Limited Liability Act of 2008 and is ideal for partners who are seeking limited liability in their business.
Private Limited Company (PLC):
A Private Limited Company is a separate legal entity from its founders. It is managed by the directors and allows shareholders to invest. It is registered under the Companies Act of 2013 and it is ideal for medium to large-scale businesses to raise capital.
Public Limited Company:
A Public Limited company is established by seven or more members under the Companies Act of 2013. Directors are responsible for all the affairs of the company. It is suitable for medium to large businesses that want to raise funds from the public.
Conclusion
If you are going to start a business in India then registering your company is the first and reliable process. Company registration is one of the necessary steps in the process because it provides a variety of advantages. Registering a company is crucial to control your business completely and build a good reputation in the market.
FAQ’s
1. What is the maximum limit of a Private Limited Company?
In India, the maximum number of members in a private limited company is 200. The Companies Act of 2013, the Regulation Act of Private Limited Companies, stated that a private company's maximum number of members shall be 200. A One-person firm is a firm that has only one member.
2. What are the advantages of registering a company in India?
Separate Legal Entity
Having your company registered with the Government. It will provide your company with a separate legal entity from its shareholders. Your company can be involved in contracts, own assets, and sue or be sued in its name, separate from the shareholders.
Ease of Raise Funds
For a registered company, it’s become easy to raise funds. Company registration increases the credibility of the entity and also enhances its reputation in the market. You can easily get shares, bank loans, and investors for your company.
Credibility and Trust
Being a registered and regulated entity, a private limited company increases the credibility and trust among customers, suppliers, and other stakeholders. It is often considered a more reliable and professional business entity, which can be beneficial to make a strong reputation in the market.
Tax Benefits
You can enjoy the various tax benefits and incentives offered by the government in India including tax deductions on business expenses, exemptions on capital profits, and low tax rates for small entities. This helps you to pay less tax for the company and its shareholders.
Maintain the Privacy and Confidentiality
It offers privacy and confidentiality in the company. You cannot disclose the confidential information of the company such as the shareholders or directors and their shareholdings with the public. It is important to maintain the confidentiality of the business operation and strategies.
Good Management Control
Registered companies allow them to make strong decisions and have greater control over the management and operations of the company. The shareholders can appoint directors and managers who can efficiently manage the day-to-day activity to enhance the business.
3. What are the different types of Companies in India?
These are the different types of companies in India:
Sole Proprietorship:
A sole proprietorship is owned and controlled by a single Person. It's ideal for small-scale businesses with low income.
One Person Company (OPC):
One Person was established in the year 2013 in India. It is ideal for solo entrepreneurs who want to start a company.
Partnership Firm:
Partnerships involve two or more persons who share profits and losses equally in the business.
Limited Liability Partnership (LLP):
An Limited Liability Partnership (LLP) is a separate legal entity where partners' liabilities are limited to their agreed contributions. It's initiated under the Limited Liability Act of 2008 and is ideal for partners who are seeking limited liability in their business.
Private Limited Company (PLC):
It is managed by the directors and allows shareholders to invest. It is registered under the Companies Act of 2013 and it is ideal for medium to large-scale businesses to raise capital.
Public Limited Company:
A Public Limited company is established by seven or more members under the Companies Act of 2013. It is suitable for medium to large companies to raise funds.
4. What is the full form of LLP?
LLP stands for Limited Liability Partnership.
5. What is the process of registering a company in India?
These are the process to register a company:
Step 1: Get a Digital Signature Certificate (DSC)
Step 2: Apply for Director Identification Number (DIN)
Step 3: Name Approval
Step 4: Fill Form SPICe+ (INC-32)
Step 5: e-MoA and e-AoA
Step 6: Apply for PAN and TAN
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