It is crucial to comply with the legalities when starting a business to ensure smooth operations. In order to conduct legal business, you must register your company. A company registration process must be completed by all business owners according to the rules and regulations of the Companies Act. The Companies Act 2013 specifies the types of companies that can be incorporated in India. Different types of companies can be registered in India before you register your company.
Private Limited Company
A private limited company is registered by a private entity to operate a small business. Company members must be at least two and no more than 200, according to the Companies Act 2013. Group members own shares of the company, which make up the company’s capital.
The number of shares you own determines your liability as a member of a Private Limited Company. Businesses treat their assets differently from individuals. Private Limited Companies are owned by individuals who purchase or sell shares. Public trading is not possible, however.
Public Limited Company
Public Limited Companies can be purchased by the general public. Three directors and seven shareholders are required for the company. The number of shares in a public limited company is not limited. Shares can be freely traded on a stock exchange. Whenever a company is owned by its shareholders, it is owned by its shareholders. Before beginning operations, companies under this category must obtain a certificate from the Registrar of Companies (ROC).
Partnership
Business transactions and operations are handled by partners in this type of company. The partnership agreement clearly outlines the responsibilities, roles, and shares held by each partner. Profits and losses are shared among the partners according to the agreement.
One Person Company
The newest type of company in India is the One Person Company (OPC). Under the Companies Act 2013, many entrepreneurs are able to run successful businesses alone. A company’s minimum paid-up capital is INR 1 lakh.
As well as the different types of companies in India, this new addition allowed one individual to manage company affairs, whereas other kinds of companies required at least two.
This is extremely beneficial for small business owners who do not require partners. Like its members, OPC is regarded as a separate legal entity. One person company registration provides limited liability protection for shareholders.
Sole Proprietorship
The sole proprietorship is a type of business registration in which one individual manages the entire operation. The owner of a business is solely responsible for profits and losses of the business. Whenever a company is registered as a proprietorship, it is registered in the name of only one person. For all accounting purposes, the owner’s account is used. In this case, proprietors have unlimited liability for their businesses.
Limited Liability Partnership
LLPs require at least two partners. In a partnership firm, the terms ‘company’ and ‘partnership’ are combined into a single business structure. Partnership assets differ from those of an LLP. Shares in a partnership determine the partners’ liability. The credibility of Limited Liability Partnership companies is higher than that of sole proprietorships and partnerships among investors. Incorporation, financial, and tax records are maintained appropriately.
Section 8 Company
Companies can register as Non-Profit Organizations (NPOs). An NPO’s primary objectives include arts, commerce, and various forms of social welfare, such as education, charity, religion, and environmental protection. In order to accomplish the aforementioned goal, profits will be generated here. In addition, its members do not receive dividends. The Companies Act 2013 requires businesses in India to register with the registrar of companies in order to be considered companies. Upon registration, companies become separate legal entities.
In order to succeed as an entrepreneur, you must register your company. Here is some information you can use to get started!
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