The definition of ‘company’ refers to any enterprise formed under the Companies Act, 2013. The company is meant to participate in activities that give them freedom about working in an innovative way. The organizational structure you choose will determine the taxes you pay. Therefore, the most important decision for an entrepreneur is to decide which type of business to register in India. In this blog, we will take a look at different types of company registration.
Different Types of Company Registration
- Private Limited Company
- Public Limited Company
- Sole Proprietorship
- Limited Liability Partnership (LLP)
- One Person Company (OPC)
- Section 8 Company
1. Private Limited Company
A private limited company is perfect for small businesses and is privately held. Almost every company in India is registered in it and they are registered under the Companies Act, 2013. The legal obligation of members of a private limited company is limited to the number of shares they hold respectively. Furthermore, under this structure of company registration, business property is separated from personal property, allowing for better protection and protection. The name of each such company ends with the term Private Limited.
Types of Private Limited Companies:
- Limited by Shares
- Limited by guarantee
- Unlimited company
When registering a private limited company, must remember the following criteria;
- Minimum two and maximum fifteen directors
- At least one of the directors must be a resident of India
- Minimum two and maximum 200 shareholders or members
- an authorized capital charge amounting to at least INR 1 lakh
- Must have a registered office address within India
2. Public Limited Company
A public limited company is a voluntary association of members and there is no limit to the number of shares that can be sold. Such companies are required to obtain a Certificate of Registration from the ROC before commencing business operations. They are also registered under the Companies Act, 2013.
When registering a public limited company, must remember the following criteria;
- A minimum of 7 shareholders is required to form a public limited company.
- A minimum of 3 directors is required to form a public limited company.
- The minimum share capital of Rs. 5 lakh is needed.
- Must have a registered office address in India
3. Partnership Firms
A partnership is a form of business entity where two or more persons come together to provide the requisite resources and share the profits in an agreed ratio. When a partnership firm is registered, the partners can avail of various benefits. However, low costs, ease of setting up and the compliance is minimal as compared to companies.
A partnership deed is an agreement between partners that specifies the rights, duties, and profits shares, etc. And, it is beneficial to write a partnership deed to avoid any future conflicts. Additionally, these businesses fall under the purview of the Indian Partnership Act, 1932. And this written agreement between the partners to form a partnership firm which we call a partnership deed.
When registering a partnership Firm, must remember the following criteria;
- Minimum two and maximum ten participants
- In addition, a registered office address within India should be
- Additionally, there should be a registered partnership deed signed by all the partners
4. Sole Proprietorship
A sole proprietorship firm is managed by an individual, also known as a proprietorship, and registered by the Government of India. Proprietorship can be started within a few days. Proprietorship is the most common form of trade that is used in India. You can start and operate a business with minimal regulatory compliance.
5. Limited Liability Partnership (LLP)
The LLP specifies a limited liability partnership and is governed by the Limited Liability Partnership Act, 2008. The main part of a limited liability partnership is a partner not liable for the misconduct or negligence of another partner. LLP also a new type of company in India and it is a separate legal entity from the partnership entity, in which the business assets are separate from the personal assets of the partners.
When registering a Limited Liability Partnership Firm, must remember the following criteria;
- Minimum authorized capital amount of INR 1 lakh
- At least one of the nominated partners must be a resident of India
- minimum of two participants
- At least one individual partner, if the rest are corporate bodies
6. One Person Company (OPC)
The One Person Company is a separate legal entity consisting of only one member and who may also be a director of the company. It is also a new type of company in India. Additionally, it became a part of the Companies Act 2013, an improvement on the traditional structure of OPC sole proprietorship that limits an individual’s liability for their capital contribution to the business.
When registering a One Person Company Firm, must remember the following criteria;
- The minimum amount of authorized capital is at least INR 1 lakh.
- a person must be a natural Indian citizen and resident
- The promoter must appoint a nominee during the incorporation
- Financial businesses cannot be included as OPCs.
- Further, one should convert into a private limited company if the paid-up capital exceeds INR 50 lakhs or the turnover exceeds INR 2 crores.
7. Section 8 Company
The Section 8 company is usually called a non-profit organization, such companies operate primarily for charitable purposes. Major intentions include arts, commerce, charity, education, protection of the environment, and its subsequent promotion. It cannot use the words “Section 8” or “Limited” in its name.
When registering a Section 8 Company Firm, must remember the following criteria;
- Minimum of two shareholders
- Minimum two directors and they can also be shareholders
- At least one director must be a resident of India
- In addition, a registered office address in India should be