The purpose of this blog is to discuss 7 types of business registrations in India. The latest data for business registration from the Ministry of Corporate Affairs states that a total of 16,570 new businesses registered in the month of September 2021, in India. This was an increase of ~ 24% from the previous month. Pertaining to the consistently sharp rise in registrations of new Indian businesses, this article aims to convey information about the types of business registration they can opt for.
Table of Contents
Businesses in India can be categorized into various types on the basis of several parameters including the requirement for registration, the procedures for registration, the size of capital investment, and the liability of the owners. Business registration in India must apply for their registrations in the manner prescribed by law. The eligibility, procedures, and costs for registering each type of business registration in India have been discussed below, along with the necessary documentation and details that are required to be furnished during registration.
7 Types Of Business Registrations In India
These are the 7 Types of Business Registrations in India.
Public Limited companies are businesses registered and incorporated as independent legal entities under the Companies Act, 2013. Such companies are owned by a group of owners with liabilities limited to their stakes in the company. The shares of public limited companies are easily transferable and tradeable in the stock exchange markets and are open for subscription by the general public as well.
Companies eligible to be registered and incorporated as a Public Limited must have a minimum of 3 directors and 7 shareholders, with no limitation on the maximum number of shareholders. There is no minimum capital requirement for registering a public limited company. The registration and incorporation of a public limited business require the following supporting documents:
- A copy of the applicant’s PAN card
- Proof of identity of the applicant
- Proof of address of the applicant
- Proof of registered office address
- proof of ownership of the property is owned by the applicant, or
- No Objection Certificate and the rent agreement from the landlord if the property is rented.
Other Prerequisites Include
- Choosing and reserving a name for the business registration
- Obtaining the DIN of the directors
- Obtaining the DSC of the applicant
- MOA and AOA drafted by the directors and approved by the members of the business for business registration.
The cost of obtaining class II and class III DSC ranges between Rs.800 and Rs.3000, differing according to their duration of validity.
You can acquire DIN, Certificate of Registration, Certificate of Incorporation, draft and file e-MOA and e-AOA online by applying through the SPICe+ (INC 29) or SPICe forms (INC 32). No application fee is charged for businesses with share capital of Rs.15 lakhs and less. For businesses having share capital beyond Rs.15 lakhs, an application fee of Rs.500 is charged. In case the business has no share capital, no fee is charged if the number of members is 20 or less. Beyond 20 members, Rs.500 is charged on each and every document submitted with the application.
Similarly, a government fee is also levied on adding an MOA in the application form for registration and incorporation. This fee is not levied on businesses having a share capital of Rs.15 lakhs or less. Beyond 15 lakhs, the fee charged for filing an MOA is mentioned below:
| Share capital (in Rupees) | Non-OPC and small companies |
|---|---|
|
15 lakhs to 50 lakhs |
12000+ 200 for every 10000 above 15 lakhs |
|
50 lakhs to 1 Crore |
156000+ 100 every 10000 above 50 lakhs |
|
More than 1 Crore |
206000+ 75 for every 10000 above 1 crore |
In Case Businesses Do Not Have a Share Capital
| Number of members | Government fee for incorporation |
|---|---|
|
Upto 20 |
None charged |
|
20-2000 |
Rs. 5000 |
|
2000 and beyond |
Rs. 5000+ Rs.10 per member after the first 200 employees |
Cost of Filing an AOA With the Application for Business Registration and Incorporation:
| Share Capital (in Rupees) | Fee for AOA |
|---|---|
|
Upto 15 lakhs |
None |
|
15 lakhs-25 lakhs |
Rs.400 |
|
25 lakhs-1 crores |
Rs.500 |
|
Beyond 1 crores |
Rs.600 |
For businesses that do not have a share capital, no fee is charged for the application of AOA upto 20 members, beyond which a fee of Rs.200 shall be levied.
After receiving the Certificate of Incorporation, the company shall apply for a certificate of commencement ensuring that all directors have paid their subscription dues.
Private Limited companies are profit-earning businesses, the ownership of which is held by at least 2 shareholders. The maximum number of shareholders in a private limited company is also limited to 200. The liability of the owners is limited to their capital contribution to the business.
A private limited company can be registered and incorporated by applying through the SPICe+ form. Part A of the form is filled to reserve and register a name for the company. The name of the company should not be visually or phonetically the same or similar to an existing company. It should also not be in violation of the Names and Emblems Act. This means that the name of the company should not show patronage of the government.
Part B of the form should be filled out and submitted within 20 days from the date of approval of the company’s name, along with the following supporting documents:
- e-MOA and e-AOA
- utility bills as proof of residence at the office address not older than 2 months
- Proof of ID and address of subscribers
- Proof of ID and address of the applicant
- All the documents and the application form needs to be signed by the DSC of the applicant.
- Stamped and notarised rent agreement and NOC from the landlord if the property is rented
The linked forms required to be filled are AGILE PRO for opening a bank account ESIC, EPF, GST, and Professional tax registration, and INC-9 as a declaration from the first director of the company. After the documents are successfully verified, the Registrar of Companies issues the Certificate of Incorporation within a week from the date of submission.
The cost of application, filing MOA, and AOA is the same as that for a public limited company.
Two or more people (maximum 20) associate to form a partnership firm and divide the income or profits earned according to a pre-determined profit-sharing ratio. Partnership firms are registered under the Partnership Act 1932. However, registration for Partnership firms is optional according to the statute. Such firms may get established and commence operations after drafting and signing a partnership deed or agreement and getting it approved/stamped by the notary.
However, acquiring Certificates of Registration and Incorporation are recommended for Partnership firms as the document is acceptable by a court of law and will enable firms to file cases against 3rd parties if needed. Registered firms can also create valid invoices, obtain tax registrations, claim tax deductions, file tax returns and enhance their credibility for customers, employees, and investors.
To get a partnership firm registered under the act, the following documents are required:
- Application Form-1
- ID proofs of partners
- Address proofs of partners
- Proof of office address
- If the property is rented no objection certificate from the landlord is required.
- If the property is owned, ownership documents and NOC from partners are required.
- Registered and stamped Partnership deed
- An affidavit declaring that all details mentioned in the application are true.
The procedure, fees, and stamp duty charges for registration of partnership firms differ for different states where the firm is resident. An application for registration needs to be filed with the District Registrar, who serves as the Registrar of firms in the state along with the prescribed fees. You will receive a Certificate of Registration after the verification of your documents and application by the Registrar of firms. Usually, the entire process of registration takes 10 days to complete. The details to be mentioned in the application are listed below:
- Name of the firm (must be unique, original, and not mimicking the name of any existing company)
- Objective of the agreement
- Date of signature and date of the deed being effective
- Date of opening and closure of the firm, can be fixed or at will.
- Place/location of the head office and other locations of business operations
- Details of the partners: name, address, and joining date
- Share capital of the firm and capital sharing ratio
- Profit-sharing ratio
- Duration of the partnership (If nothing is mentioned, it is at ‘will’)
- Salary or commission paid to partners, if any
- Policy regarding partner’s contribution drawings, loans, rights, and obligations
- Policy regarding admission death or retirement of a partner/partners.
The application form must be signed by all partners and certified by a gazetted officer, professionals like lawyers, or chartered accountants. All partners are liable, both individually and jointly, in accordance with the profit-sharing ratio between them.
A Limited Liability Partnership combines the best of the two entities, a Partnership firm and a Limited company. It fixes the liability of the stakeholders to the percentage of stakes they hold in the business and reduces their legal and tax compliances akin to a partnership firm. LLPs are registered under the Limited Liability Act, 2008.
Businesses need to apply for registration as LLPs by filling out Form-2/ FiLLiP online on the MCA portal. The minimum number of owners required for registration of an LLP is 2, with no limitations on the maximum number of owners. Also, there is no threshold limit on the minimum share capital required to register an LLP.
The procedure for registering an LLP begins with obtaining a DPIN (Designated Partner Identification Number) and DSCs for all members of the LLP. DSCs can be acquired from Certifying agencies including National Informatics Center, NSDL, e-MUDRA, IDRBT, etc. The cost depends on the certifying agency, the class of DSC, and the duration of validity of the DSC. Usually, the cost ranges from Rs.800 to Rs.3000. After obtaining the DSC, register it through the MCA website. For registration of an LLP, Class II DSCs are needed.
For obtaining a DPIN, Form DIR-3 needs to be filled out and submitted online by existing LLPs. New companies can also apply for DPIN through the online FiLLiP form by filling out form-9. DPIN shall be allotted within 2-3 working days from the date of application. The application fee for obtaining a DPIN is Rs.100.
The next step is to reserve a name for the LLP, which can be done by filling out LLP-RUN or FiLLiP forms. Available names can be searched on the official website of MCA. After a valid name is found for the LLP, the RUN-LLP web service available on the MCA website is used to reserve it. You can propose a maximum of 2 names and submit the form by paying Rs.200 as the application fee. It usually takes 2-3 working days for the application to be processed at the Central Registration Center and the name of the LLP to be reserved. The reserved name is valid for 30 days within which the LLP must be incorporated. If the applicant fails to do so, a new application needs to be resubmitted using RUN-LLP.
In case the Incorporation form FiLLiP is used to reserve the name of the LLP, only one name can be proposed. If the name proposed is similar to an existing business entity/trademark, a No Objection Certificate in the form of a Board Resolution along with the proof of identity of the signatory of the resolution are required.
The next step is the incorporation of the LLP, for which the following supporting documents are required:
- The proof of identity and address of all partners
- The PAN cards of all partners
- Passport of the partner if the partner is a non-resident Indian
- Proof of address of the office
- If the property is rented, a No Objection Certificate from the owner of the property
- Proof of residence of the registered office address, for example, utility bills
- Business activity code
- All the above documents and the application form must be signed using a DSC
- It is mandatory to register the LLP agreement according to Section 23 of the LLP Act. LLP agreement to be filed for registration in Form 3 available online on the MCA portal. The form needs to be filled out within 30 days of incorporation of the LLP. The LLP agreement must be printed on the stamp paper of the state where it is registered.
The entire process of business registration and incorporation usually takes around 15 days. The cost of registration of an LLP is mentioned in the table below:
| Authorised Capital (in Rupees) | Registration fees (n Rupees) |
|---|---|
|
Upto 1 lakh |
500 |
|
1 lakhs to 5 lakhs |
2000 |
|
5 lakhs to 10 lakhs |
4000 |
|
Above 10 lakhs |
5000 |
The cost of registering the LLP Agreement is mentioned in the table below:
| Share Capital (in Rupees) | Registration fees (in Rupees) |
|---|---|
|
Upto 1 lakh |
50 |
|
1 lakhs-5 lakhs |
100 |
|
5 lakhs-10 lakhs |
150 |
|
Above 10 lakhs |
200 |
One person companies are registered under the Companies Act, 2013 and have only one member and one nominee. The member can also be the owner and the director of the company. An OPC can be registered as a company limited by shares, a company limited by guarantee, or an unlimited company.
Application for registration and incorporation of the company can be filed using the online SPICe+ (INC 32) form available on the MCA website. However, DSC is a necessary prerequisite for doing so. DSCs can be acquired from certifying authorities. When applying for the same, the following documents shall be required:
- Proof of identity of the applicant
- Proof of address of the applicant
- PAN card of the applicant
Once the DSC is obtained, an application needs to be submitted for obtaining the DIN. New companies can apply for DIN through the SPICe Form, supported by the identity and address proof of the applicant/s. DIN applications for maximum 3 directors can be filed using the SPICe+ form. The next step is to apply for the name approval of your company. This can also be done through the SPICe+ application. You can propose a maximum of 2 names for the company and check for the available valid names on the MCA portal.
After filling out the application for name reservation, the registration and incorporation of the company are also applied for using the same form. The documents required for the same are listed below:
- Memorandum of Association
- Articles of Association
- Personal details along with a consent form (INC 3), identity and address proofs of the nominee
- Proof of registered office address
- If the property is owned, then ownership documents and if rented, the rental agreements are required
- INC 9 to be filled as the Director’s declaration
- Declaration by tax and legal professionals ensuring that all compliances have been met.
After the documents are approved by the registrar, the company gets incorporated. The entire process takes around 10-15 days. Only an Indian citizen and Indian resident individual can own an OPC in India.
Sole proprietorships are businesses owned, managed, and controlled by a single owner. There is no provision for transfer of ownership as these businesses do not have a nominee. The only way to transfer ownership is by selling the business to a different owner. Proprietorships do not operate as separate legal entities but as the property of the proprietor. All assets and liabilities, income and losses, rights and responsibilities are shared between the proprietor and the proprietorship.
There is no provision to register and incorporate a proprietorship under a statute. However, proprietorships are recommended to acquire registrations under GST, MSME, and Shops and Establishment Act to open a bank account, avail of tax benefits, and other government privileges. Proprietorships are not required to pay any taxes as a business entity upto Rs.2 lakhs of income, beyond which the proprietor is taxed on behalf of the business. However, beyond the income of Rs.10 lakhs, proprietorships can hardly avail of any tax benefits. Besides, to open a bank account the following documents are required:
- PAN card of the proprietor
- Proof of identity of the proprietor
- Proof of address of the place of business
Proprietorships can be opened by Indian citizens and NRIs. Also, there is no minimum capital requirement to begin a business as a proprietorship.
Section 8 of the Companies Act, 2013 mentions provisions to establish non-profit organizations, owned by an individual or associations of people, as limited companies. The primary objective of these companies is to promote arts, commerce, education, sports, science, research, social welfare, religion, charity, and environment conservation. All the income, donations, and grants that are pocketed by a section 8 Company, must be spent in the promotion of the objects mentioned above .
The minimum number of directors and shareholders for section 8 companies to be registered as private limited companies is 2 and 20 respectively. However, to get registered as public limited companies, the minimum number of shareholders is 7 and the minimum number of directors is 3. There is no limit on the maximum number of shareholders and directors if registered as a public limited company; however, a private limited company registration shall limit the maximum number of shareholders to 20. There is no minimum capital requirement for registering Section 8 companies in India.
The company can be incorporated and operated as a separate legal entity. Donors to the companies can avail of tax benefits under Sections 12A and 80G of the Income Tax Act.
The procedure for incorporation of Section 8 companies is the same as that of incorporating a limited company. The first step is to acquire DSCs, followed by obtaining a license from the Central Government, after which the SPICe+ form is filled to apply for the following:
- Name reservation and approval in Part A
- MoA and AoA registrations
- DIN
- Certificate of Incorporation
- PAN
- TAN
- ESIC, EPF, professional tax, and GST registration, in addition to opening the business bank account, must be applied by filling the AGILE PRO form attached to the SPICe+ application.
The following documents are required to be submitted with the SPICe+ form:
- Proof of identity of the applicant
- Proof of residence at the registered office address
- Declaration of the first director of the company
- Declaration of legal and tax professionals ensuring that all compliances have been met.
- Consent of nominee
- Identity and residence proof of nominee
- If the subscriber to the company is the company itself, a copy of the resolution passed in this regard by the promoter company is required.
- e- MoA and e-AoA
- All the documents, including the SPICe+ form, must be attested and signed using a DSC.
To obtain a license from the Central Government for Section 8 company, form INC 12 needs to be filled out online on the MCA website. The following supporting documents are required to be submitted along with the form:
- e-MoA in Form INC 13
- e-AoA in Form INC 13
- Declaration forms 14 and 15
- Estimated income and expenditure for the next 3 years
- Approval/NOC from the concerned authority, the sectoral regulator in the Central or State Government
- Copy of Resolution passed by the board in a general meeting
- Financial statements, board reports and audit reports of past 1-2 years
- Assets and liabilities statement of the company from the RoC.
Conclusion
Registering any one among the 7 types business can be expensive and tedious assuming that you lack the expertise, experience, and knowledge of the necessary procedures. SetIndiaBiz has been involved in providing all the 7 types of business registration services to clients from all backgrounds. Our services are fast, inexpensive, credible, and reliable in terms of quality. If you own a startup and are looking for registration services, do check out our website for detailed information.
Public Limited companies are businesses registered and incorporated as independent legal entities under the Companies Act, 2013. Such companies are owned by a group of owners with liabilities limited to their stakes in the company. The shares of public limited companies are easily transferable and tradeable in the stock exchange markets and are open for subscription by the general public as well.
