Various Business Registrations in India

Various Types of Business Registrations in India

The taxes you must pay, the compliance procedures you must take, and the eligibility criteria you must fulfil will all be determined by the organisational structure you chose. As a result, determining what form of business registration to conduct in India is one of the most important decisions an entrepreneur can make. Furthermore, the Indian legal system permits the formation of many sorts of firms under various types of company registration. We’ll look at the many sorts of business entities and types of company registration in this blog.

Companies Of Various Types

Following is a list of the many classifications and types of business entities found in India, as defined by the Companies Act, 2013.

Company Registration Types

The primary method through which business owners form or incorporate their firm is through company registration. As, India has so many different sorts of businesses, entrepreneurs must choose one that best suits their operations. The Companies Act, 2013, in India, establishes criteria for several types of business formation. As a result, here’s a quick rundown of India’s business types.

1. Private Limited Company
2. Public Limited Company
3. Partnerships
4. Limited Liability Partnership
5. One Person Company
6. Sole Proprietorship
7. Section 8 Company

• Private Limited Company 

Private Limited Companies are ideal for small enterprises that need to register as a separate legal entity. To protect their own assets, a group of shareholders divides the liability amongst themselves in this form of business. The entire capital of such businesses is equal to the sum of all the shares held by each company member. In addition, the members’ personal and corporate assets are treated separately, giving for greater safety and security. Shares in such a firm cannot be traded or transferred publicly.

• Different Types of Private Companies

1. Limited by Shares: In such private limited businesses, the memorandum determines the members’ duty for unpaid amounts on shares issued to them.
2. Limited by Guarantee: In this instance, the members’ liability is limited by a memorandum outlining how much they will contribute or guarantee to pay if the firm goes bankrupt.
3. Unlimited: Furthermore, the responsibility of such forms of business entities’ members is unrestricted. As a result, if the company’s assets fail to pay creditors, members will be forced to repay obligations with their personal assets, raising the risk element.

• Public Limited Company

A Public Limited Company is one in which members of the general public can buy shares. There is no limit to the number of shares that can be sold or traded in such businesses because, the company’s shares are listed on the Stock Exchange, they can be freely traded, making the shareholders part-owners. Before beginning business operations, such businesses must obtain a Certificate of Registration from the RoC.

• Partnerships

The activities of such businesses are managed by partners who have agreed to their roles and share in the profits. As a result, in a verbal contract known as the Partnership Deed, the tasks, duties, powers, and number of shares held are all clearly established. Additionally, the Indian Partnership Act of 1932 applies to these businesses. As long as they have a legal and registered Partnership Deed, partnership firms can operate with or without a licence. Most partnerships, on the other hand, do register since it offers them more privileges.

• Limited Liability Partnership

Limited Liability Partnerships, or LLPs, are a relatively new type of organization in India. Furthermore, it has its own legal character, making it easier to distinguish between personal and business assets and providing entrepreneurs with limited liability protection. In these sorts of businesses, each partner’s responsibility is proportional to the number of shares in the company, providing more protection than a sole proprietorship.

• One-Person Company

OPCs are the newest addition to the several types of company registration available in India, and they are ideal for small firms. It was also included in the Companies Act of 2013 to assist entrepreneurs who want to run a firm on their own. Entrepreneurs benefit from liability protection without needing to partner with anybody else because such a firm type has its own legal position. Furthermore, because they only involve one person, this sort of business registration is simple to set up and manage. Furthermore, this is effectively a hybrid of the Sole-Proprietorship and Company commercial entity models.

• Sole Proprietorship

A sole proprietorship is a business that is owned and operated by one person.Another form of business entity is one in which the business is managed by a single person. The company and the owner, on the other hand, are treated as a single entity in this firm type, making them completely accountable for earnings and losses. Furthermore, because the owners’ names appear on the registration, the owners’ names appear on tax filings and accounting reports, resulting in infinite business liability. As a result, there is no separate business registration process for this sort of corporation.

• Section 8: Company

Non-Profit Organizations (NPOs) are businesses that primarily work for charity objectives. It also involves encouraging the arts, science, literature, and education, as well as caring for the less fortunate and conserving the environment. Furthermore, all revenues earned by these sorts of companies are spent to fulfil these goals, and the members do not get dividends. The Section-8 Company must meet the following conditions to be qualified for this type of business registration:

1. A minimum of two stockholders is required.
2. A minimum of two Directors is required, and they can also be stockholders.
3. One of the Directors must be a resident of India.
4. There is no requirement for a minimum amount of capital.
5. Furthermore, a registered office address in India is required;