Choosing the Business Structure and the Means of Company Registration in India


To work legally, in India, every business has to register itself. The means of company registration starts by deciding the structure of it. By choosing the right structure, an organization can:

  1. Meet targets set easily.
  2. Operate at its highest efficiency.

A Business Structure – the Vital Necessity of it

The structure of an organization determines two essential aspects:

  1. The filing of Income Tax returns.
  2. The compliances that need to be adhered to.

To offer a clearer picture take this instance:

A business registered as an organization has to file income tax returns together with annual returns to the Registrar of Firms. Alternatively, a firm registered as a sole proprietorship merely has to file income tax returns. Furthermore, an organization’s financial books need should be audited annually which implies extra expenses of:

  1. Auditors.
  2. Accountants.
  3. Tax filing authorities.

One other example of how a business composition can influence the corporate is:

Some structures like a PLC or LLP have the image of being investor-friendly because they’re separate legal entities. It signifies that a business which hopes to get a monetary backup in the longer term would fare higher as a PLC or LLP. If the owner chooses to register as a sole proprietor, she or he may face issues while searching for outside investors.

Essentially, it means consider many aspects before electing the business structure because they impact the enterprise in the long term.

4 Primary Business Structures in India

The choices an entrepreneur has when deciding the formation of business are:

  • OPC

One Person Company allots a single individual because the sole-proprietor of a firm. One of these structure is good for a corporation that has only one owner or promoter. It was introduced in 2013.

  • LLP

Limited Liability Partnership has a couple of owner. Called partners, there may be a restriction on the liability they need to bear. It is the same as the contribution they made. The LLP is a separate legal entity.

  • PLC

Private Limited Company can also be a separate legal entity from its creator. Essentially the most common variety of structure, it has directors and shareholders. The firm considers all of them as employees.

  • PLC

Public Limited Company also has a separate legal existence, and like an LLP, the liability of its members is restricted to their shares. This structure is formed by “a voluntary association of members.”

A Business Structure – Easy methods to Select the Right One While Applying a Company Registration Online

To choose the best selection of a business structure, ask the next questions.

  • What’s the number of householders of the business?

An OPC is good when one individual is putting up the whole initial capital. An LLP or a Private Ltd. Co. can be higher fitted to businesses which have 2 or more owners and are also searching for further investment by latest entities.

  • Does the initial investment affect the structure?

Yes, it might probably influence the choice. For instance, owners who don’t need a considerable investment on the starting can pick:

  1. A Partnership.
  2. Sole Proprietorship.
  3. A Hindu Undivided Family.

Entrepreneurs who’re sure to recoup compliance and setup cost can select:

  1. Private Limited Company.
  2. OPC.
  3. LLP.
  • How much liability may be borne?

Structures like PLC and LLP have a clause for restricted liability. It indicates that in case there may be a default of loans the members will only repay the quantity equal to:

  1. Their contribution.
  2. Value of shares held.

In other structures reminiscent of partnership, HUF, and sole-proprietor, the liability has no limit. They members or owners need to repay your entire cost which may put personal assets in danger.

  • What are the applicable tax rates of the business structures?

For an entity registered as an organization or partnership, a flat tax rate of 30% is applicable. For HUF and sole-proprietorship, the slab rates applied are standard.

  • Will others be investing in the corporate?

Any business that hopes to get investments from enterprise capitalists or other parties should register it as a Private Limited company or LLP. They’re measured as trusted entities and due to this fact easier to get financial backup.

The Process to Registering a Latest Business

A latest company Registration or startup in India can now be easily registered easily online. The brand new process was incorporated by the Ministry of Corporate Affairs a couple of years back. The essential steps that have to be taken to register a business are:

  1. Get a Digital Signature Certificate, also often known as DSC.
  2. Get a Director Identification Number, also called DIN.
  3. Accurately fill within the Latest User Registration form, also termed as eFrom.
  4. Submit the eForm.

The corporate is now registered and able to work in India legally.


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