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  • What are the different types of business registration in india?

    Planning to do a business registration? Want to know the details? Check out this Ask Expert page where ISC experts have responded with details types of registrations, method of regsitration and how to choose a type.

    What are the different types of business registrations in India?
    Please explain me all types of business registrations with details. How can I register?
    Is there something important in selecting a name?
    Is it important to choose a registration type according to amount what we transfer in bank?
  • Answers

    2 Answers found.
  • If you are planning to start a business then having a registration is a must if you wish to expand it in the future. Anyhow, whatever business you start it will have to be registered under some law or another and the same is for your benefit only.

    Having a business name is important as the name of the business is the first identity with which people remember it.

    First of all, you need to finalize the identity of the business you want i.e. Proprietorship, Partnership, Private Limited Company, Society, Trust, etc. Most common are the first three options. As you have not mentioned as to what business you wish to start, specific advice is not possible and all commonly applicable registration is explained herein.

    1. Proprietorship: The proprietorship status of a business is the one where the individual doing the business and the business is one. Usually Proprietroship business is for small scale business and an individual savings account can be used for transactions. Still, for sake of ease and accounting a separte account is preffered.

    Registration in case of Proprietorship is seldom required but still, if one is carrying on business in a marketplace and owns a shop then registration under Shop & Establishment Act will be needed, it varies from state to state so one must refer to them locally.

    PAN is must so an individual PAN will be used for the business. You can name your business anything but you cannot use the suffix Pvt. Ltd., Ltd., or LLP. You can use Messrs before the name of your business or you can even use the term Corporation or Company, etc.

    There is no limit on account of money that you can transfer to your bank for purpose of business but still the same should correspond to the scale of activity you wish to conduct in your business. If your business is in some professional service industry then the investment maybe lesser but if your wish to start a business in product related business then the investment may be higher.

    2. Partnership or LLP (Limited Liability Partnership): If you wish to start business in collaboration with another person then you may start a partnership firm. A partnership firm is an entity where two or more persons come together and contribute capital to start a business with unlimited laibility.
    A partnership firm is started in order to collect more funds to start a business or to pool skills of different individuals.
    A normal Partnership is registered under Partenrship Act, 1932 based upon the initial Capital contributed and the partners have unlimited liability i.e. to make good the loss even from personall assets (if any).

    LLP is a new form of Partnership firm but with limited liability, where the partners have liablity limited to the amount of share capital contributed. LLP is registered with Ministry of Corporate Affairs (MCA) and has more goodwill than a normal partnership firm. LLP can be verified by anyone by providing the requisite information on MCA site.

    Since, LLP or Partnership Firm is a separate enity hence a separate PAN will have to applied for and also a separte bank account is to be opened in the name of the firm where the Capital will be transferred.
    Even a TAN i.e. Tax Deduction Account number must be applied for and tax deducted on payments must be deposited and quarterly return be filed against the TAN for the assessees to get credit of tax deducted.

    3. Private Limited Company (Pvt. Ltd.): A Private Limited Company is a separte legal enitity with limited liability and separate corporate veil and works under a common seal. A private limited company shall have minimum of 2 shareholders to form a Pvt. Ltd. Company.
    Company is registered on MCA and receives a Certificate of Incorporation (COI) final registration.

    A minimum of Rs. 1 lakh is needed to incorporate a company and further contribution can be made as and when required.

    A Comapny must be registered first with a name that will be its legal identity for the general public and the Shareholder and Directors work under this name. Shareholders are owners of Company and Directors are the strategic managers who run the company, but in case of Private Limited Company both can be same.

    For a Company also PAN, TAN registration is must with its very first registration with MCA. A separate bank account is required in the name of Company for it to send and receive money in.

    Now for all the above entities GST registration will be needed if it exceeds the basic threshold limit of Rs. 20 lakhs in case of you are providing service and R. 40 lakhs in case of Sale of Goods. There is another limit for Special Category sate which you can refer on the GST website.

    These are some registrations based on the type of entity you prefer to form and they are mostly in Income Tax, GST and some Laws applicable to these entities under which theymust get registered. There are still a lot of other registrations which one has to comply based on the type of business one is going to start.

    For example, you are going to start a food business then you must get a Food Safety license from FSSAI in addition to the regular regsitartions. If you are going to start a manufacturing unit which will produce a lot of waste effluents then you must get a Pollution Clearance certificate from local authority, etc.

    If your business will employ more than 20 employees then you must also get registered under Provident Fund Act or if your industry is labor intensive the you must get registered under the Labour Act. There are other safety clerance and other local requirements which you must adhere to and consulting a local legal expert is advised in such cases.

    So, depending upon the type of business and the quantum of Capital you can choose the enitity you want to form and accordingly the compliances will follow based upon the registration you avail.

    Live before you leave.

  • If interested to set up a business in the Indian Environment, you will have to look out some plateform offering you all the relevant information relating to business registration.
    Registration of companies in India is mandatory providing plethora of benefits after procuring the process of registration. If the aspirants have the right vision, they would go in for an incorporating company. The following are some of types of business registration being followed in India-
    1) One person company- OPC is a company having its separate existence but is governed by a single member. In such a company, it must have a nominee who would take up the entire business in case of death of the sole member.
    OPC is superior in the sense that it enjoys brand value, recognition within the circle and lower income tax liability.
    2) Private Ltd Company - If the entire capital is held by a closed group of people, the same is termed as a private limited company and in order to serve such a company, the promoter would need two share holders and two directors. Members and the company can exist separately and it's existence is not affected by the death of the sole member.
    3) Public Limited Company- A public limited company is a company allowing public to be part of the company where public can subscribe to the shares of the company. It can offer a host of benifits including the expansion of the company globally.
    It would require at least seven shareholders and three directors to make the same operative.
    4) Section 8 Company - Such type of companies are not meant for earning profits rather they would invest the entire income for the welfare of the society rather than distributing the income to the shareholders and members.
    5) NBFC Company - It is a company registered under the company act 2013 providing banking facility. However, it is not to be treated a bank, rather it is a financial company.
    The principal purpose of NBFC is to carry out business of loans and advances, taking over shares,stocks, debentures, bonds and securities issued by the Governor or the marketable securities. RBI would control the entire functioning of NBFC.

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