Owning and running a business are two completely different things. In the former, you get people to do tasks for you, but in the latter, you have to be active in the business operations. Registering your new business is an important step towards its growth, and it must be done in order to avoid any shortcomings that your business may otherwise face. Before introducing you to how you can register a new business in India, let’s walk through some of the basics.
What is Business?
The modern definition of business is that it is a system wherein the exchange of goods and services takes place to get financial gains. For example, a person selling fruits for Rs. 50 per kilogram is running a business of fruits, and a person selling cars to global consumers is also running a business.
There are three types of businesses:
• Large Scale
• Medium Scale
• Small Scale
Depending on your ability to invest, you can start any business of any scale. But when you do, you must get your business registered in India. Why? Well, here’s the answer.
When Does it Become Necessary to Register a Business in India?
It is imperative to register your company in India when it is earning decent revenue and is getting recognized in the market. But there are some important things that make it compelling to get your business registered. These are the advantages that registering your business brings. When you register your business you get tax benefits, limited liability, and brand building. You also get the upper hand on your competitors if they have not registered their company yet. Lastly, you will face minimum or nil legal issues if your company is registered. If you are willing to enjoy these benefits, then you must sign up for business registration.
How to Register a New Company or Business in India?
The process to register a new company in India is quite simple. There may be a bit of paperwork, but otherwise, it is completely digital. You do not have to visit the office of the Ministry of Corporate Affairs to get the registration done. You can do it from the comfort of your homes or offices by using a laptop and a stable internet connection by following these simple steps:
Step 1. Obtain a Digital Signature Certificate
The documents will be submitted in electronic format. These documents are valid according to the IT Act, of 2000. The documents are considered genuine and authentic if they have your digital signature.
Step 2. Get Director’s Identification Number
This concept was brought in after the amendments done in the Companies (Amendment) Act, 2006. Sections 266A and 266G have been created specifically for Director Identification Number.
Step 3. Sign Up With Your Company Details on MCA Portal (new user registration at mca.gov.in)
Now all that is left to do is to sign up with your company details on the Ministry of Corporate Affairs Portal.
Step 4. Apply for the Registration of Your Business or Startup
Once you have filled in the details, go ahead and apply for the registration of your business.
It is quite easy to get your business registered in India because all it requires is a bit of familiarity with the process.
You can also take the help of the company registration consultants as they will take care of the complete registration process and help you with all the other Business services like GST Registration & so.
Documents Required for Registering a New Business in India
The following documents are required when you are going to register your new business in India:
i) Copy of Formal Letter by ROC Mentioning the Availability of Company Name
ii) DIN of All the Directors of the Company to be Registered
iii) Digital Signature Certificate
iv) Form 1 for Incorporating the Company
v) Form 18 as Proof of Address or Location of the Company
vi) Form 32 for the Details of Board of Directors, Managers, and Other Decision-makers in the Company
So before you apply for registration, make sure that you have all these documents ready at your end.
What Kind of Companies is Eligible for New Business Registration in India?
A lot of companies are born every year in India, but only some of them get registered. This could be because of the lack of awareness among business owners. But if you own any of the following businesses, then your business is definitely eligible for registration.
A. Private Limited Company
A company that is owned by individuals and does not share its ownership with the public is known as a private limited company. You can start one with just two people and extend the number of members to a maximum of 200. For example, RIL, TCS, Wipro, ITC, HUL, etc.
B. Public Company
A company whose securities are available in the stock market to trade is known as a public company. It can be started with just 7 people. For example, SBI, CIL, NTPC, BHEL, GAIL, SAIL, etc.
C. Sole Proprietorship Company
This may seem similar to a one-person company, but the difference here is that the owner is solely responsible for the losses, debts, and benefits of the business.
D. One-Person Company
In this situation, the company can enter the corporate market while still being owned by a single person.
E. Limited Liability Partnership
A limited liability partnership company is the culmination of a company and a partnership firm. The difference that lies here is that the liabilities faced by the partners in this type of company is limited.
The simple definition of this type of company is that it is an arrangement between two or more people wherein they agree to share the profit and bear the losses of their business in equal proportions.
Do not wait to get your business registered if your business falls in any of the above-mentioned categories.
What are the Benefits of Registering a Business in India?
Getting your new business registered brings the following advantages to your company:
a) Safety from Limited Liability
You will be safe from losing your personal properties in the circumstances of facing a major loss in business if you have registered your business.
b) Gives Your Company Legal Recognition
The registration number is obtained when the registration process is complete. And this number gives your company legal recognition which can be leveraged on multiple fronts.
c) Helps Get Business Loans and Build Relationship With Banks
You will have no trouble in getting loans for the development of your business from banks. This in turn will boost the growth of your company by manifolds.
d) Less Tax to Pay
Your company will save a lot of money on taxes when it gets registered on the portal of MCA.
e) Registration Brings Reputation!
When you register your company, it gets recognized by the government. And there is nothing more believable in India than a company that possesses validation from the government.
So if you want to enjoy the above-mentioned benefits, you know what you have to do.
It is pretty apparent that you can get your business registered by complying with the guidelines issued by the Ministry of Corporate Affairs. Registering your business will not only keep it safe from legal issues, but it will also act as an effective tool to get financial aid from banks and other bodies. That is why it is crucial that you get your new business registered right away!