Importance of Company Registration

1. IMPORTANCE OF COMPANYREGISTRATION https://taxguru.in/company-law/importance-company-registration.html 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 isbest. 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 websitemca.gov.in An effort have been made to find out the best options before coming into companyformation. 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 aboutit. The Benefits under CompanyRegistration LimitedLiability: The directors and shareholders of the company have no personal liability towards of any unfortunate event happens like, business loss, failure in thebusiness. Hence Registered Company protects the personal assets of the directors, shareholders in the unfortunate event which is not in control withanybody. Legal Entity status orRecognition: 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 likefirms. Operations of Registered company gives more confidence to the suppliers, Bankers who will prefer to dealing with Registeredcompanies. Easy to attract to talented workforce and achieve strategic goals through employees by designating wide rangeof positions like Executive directors, operation directorsetc. Existence of the company remainsforever: 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 oflaw. Once company registered it remains alive, until it’s closed down as per Companies Act,2013.

2. The death of the promoters, directors does not affect the continuity of thecompany. Big Project cost and Riskfactors: 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 registeredcompany. EasyTransferability: 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 stampduty. DualRelationship: In the company form of business, separate share-hodlers agreement can be executed between company and with its Directors, promotersetc. It’s also possible, the promoter become an employee of the company and drawsalary. The person at the same time become, Shareholder, director, employee, creditor of the companyexample: As a director, he can draw salary fromcompany As a shareholder, he can draw dividend fromcompany As a landlord/lesser, receive a rent fromcompany As a creditor, he can lend and receive interest fromCompany As a supplier, he supply the goods or services from his family business tocompany. Borrowingcapacity: 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 andproprietorships. Taxationbenefits: 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 Netprofit. Raising money fromPublic: 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 placementetc. 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 thecompany.

3. Types ofCompanies: Pvt Ltd company or private limited companyregistration 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 200only. One person company registration orOPC 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 themaximum turnover limited to 2 Crore only Ltd or Limitedcompany 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. LLPRegistration 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 ofRegistration. 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 variousbenefits. Llp registration in Bangalore, Karnataka can be done within 5 workingdays. Nidhi companies orNBFC To run the financial institution within in the group of members, Nidhi business isideal. 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 theRBI. NGO or RegisteredNGO 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 andmanagement. 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 corporateworld. Unincorporatedentity Sole proprietorship business not required any license, as this is linked to person individual PAN number for all his business transactions. It’s suitable for business where exposure is very less like income isbelow

4. Rs.50,000 per month. The cost for running is very less, if you’re starting a small business for family income and working yourself only then, consider of proprietorship is the best option, as its suits for Boutique, a coaching center, small food hub, freelancers. The immediate advantages are easy formation, minimum compliance; you start it and then take GST if required. the disadvantage under this is, less access to capital; people perceive proprietorship as a tinybusiness. FirmRegistrationisalso,unincorporatedentitylikeproprietorshipbusiness,whereheretheownersare more than 2 number, it can be formed by just entering an agreement between the 2 or more people or itcan been registered through respective State Act, wherein, the firm registration in Bangalore has been decentralized based on the zone and the visibility of business is zero, this is suitable for business where they have limited resources and minimal risk exposure in the business. Under partnership, partners has to share the risk of the business. Partnership firm registration cost ranges from INR 10K to 12K, the registration of firm gives separate PANcard. Types of LicenseRequired: Fssai or Fssai Registration or FssaiLicense 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.11Lac. Dipp Registration or Startup IndiaCertificate 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. Shop and establishment registration or Shops andEstablishment 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.300only. Trade licenseregistration 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 commonlycovered 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 thebusiness. ESI PFRegistration 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 andESI PT registration or professional taxregistration 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 asPT.

5. ISO 9001 certification or ISOcertification 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 fromRs.3000. Minimum Requirement for FormationCompanies: Minimum paid up capital of privatecompany Capital can start from INR 1 to no limit based on your businessrequirement List of Directors as per Company structure and there shareholding pattern Legal papers like director KYCdocuments Documents andprocedure: After you choose a form of business you want to start, then below documentsrequired. Collecting the Directors Pan, Aadhar card, Photo, Email, Mobilenumber. Validating the documents, and apply for Namereservation Apply for DSC and DINnumber Apply for namereservation Registration of aCompany Time forRegistration Registrationonline Once all those documents, then need to file with company registrar (MCA) and get the Registration onlinewithin a 5 workingdays. Mca registeredcompany Ministry of Corporate Affairs is the custodian and issues the Certificate of Registration within 3 working days from submission of completerecords Registered CompanyWins When it comes to goodwill in general public, other stake holders, registered companies obviously winsout. 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