Registering a Business in India

How To Form A Business Establishment.

A business establishment can be incorporated in the form of a company, partnership firm, limited liability partnership, one person company, and proprietorship. Though it is not mandatory to register a company before starting a business in India however, the nature of the business establishment depends upon the requirement of the individual, such as tax exemption, funding requirements, liability assessment, membership, etc.

Formation of a Company

The incorporation of a company in India is primarily governed by the Companies Act 2013.  A company formed under the companies act can be either

  1. A company limited by shares; or
  2. a company limited by guarantee; or
  3. an unlimited company

The companies can further be divided into public companies; private companies; one-person company. For a public limited company, the act prescribes in section 3 of the act that the minimum number of members should be 7 or more. Two or more persons are required for making a private limited company.

Other modes of registering the business in India:

  1. Proprietorship: A sole proprietorship firm is an entity that is owned by a single individual.
  2. Partnership Firm: The Partnership Act, 1932 defines partnership in Section 4 of the Act as – “An agreement between persons who have agreed to share profits of the business carried on by all or any one of them acting for all.”
  3. Limited Liability Partnership (LLP): A LLP is a partnership that allows the partners to have limited liabilities. An LLP has a legal entity separate from its partners and perpetual succession. The LLP Act, 2008 is separate legislation, and the provisions of the Indian Partnership Act, 1932 are not applicable.
  4. One Person Company (OPC): OPC provides an avenue for a person who wants to venture into a business under the guise of an organized business structure.
  5. Section 8 Company (Non-Profit Company): The Companies Act allows an association of persons to register under this Act a limited company for purpose of fulfilling objectives promote fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or other similar objectives.

Establishing a new business is always a challenging and exciting process in India. To build the business and gradually to upgrade is a continuous process and one must be familiar advantages and disadvantages of the available options before starting your business in India.

— Advocate Ravindra Vikram, Ph: +91-94100-22521

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