Introduction: Simple 4-Step Procedure to Incorporate Business in India
The bureaucratic bottlenecks involved in registering a company in India has discouraged many people from registering their companies. Company incorporation in India, guided by the New Companies Act 2013 differentiates company types and has separate rules for them. Some are private limited, public limited, government company, semi-government company, One Person Company, Non-Governmental Organisations and many more. Laws vary for companies generally and some registrants need to be accompanied by the owners or partners before applying for company registration.
Company incorporation in India does not only make a company legal, it also brings them to the level of credibility and reliability in the target markets and the sector. Registered companies are able to participate in businesses anywhere and they are often preferred by customers and vendors. Registered products and services are always treated with respect when compared with unregistered ones. From the legal, marketing, and branding points of view, company registration is important.
Here are the different types of New Company Registration/Business Incorporation:
Sole Proprietorship: The sole proprietorship is the simplest business form under which a person can run a business. The sole proprietorship is not exactly a legal entity, it simply refers to a person who owns the business and is personally responsible for its assets and liabilities.
Limited Liability Partnership: A separate legal entity which can be formed in India by a minimum of two persons with the motive of gaining profit.
Partnership: A business arrangement in which two or more individuals manage and operate a business. Both owners are equally liable for the liabilities and assets of the business. Partnerships are easy to form and there is no minimum capital requirement. Only two people are needed to incorporate a partnership.
Private Limited Company: Private Limited Company is the most preferred form of business for many people. A private company can be formed by two people. A private company is the ultimate form of business, because of the freedom it affords owners. They can issue ESOPs, raise capital and do a lot of other things on their own.
One Person Company: OPC can be termed as an advanced form of proprietorship. Only one person is required to form the OPC and he/she enjoys all the benefits of a regular limited liability company.
Public Limited Company: Public limited Company is the biggest and the most sophisticated form of business in India. Public limited companies give the confidence of being part of something big .
However, let us begin to go over the four registration Steps.
Step 1: Get Director Identification Number (DIN)
This is the first thing to do during company incorporation in India. Every director of the company should acquire their identification numbers. Following the amendment act of 2006, getting a DIN is compulsory for every intending director. To get a DIN, the applicant needs to fill the eForm DIN-1. The DIN-1 form is available on the official website of the Ministry of Corporate Affairs and it is named the DIN-1 Form.
Registering on the MCA Website will provide a login ID. After filling the DIN-1 Form, the form should be uploaded to the website and the applicable fees must be paid. After getting DIN, the applicant should then inform their company about the DIN. The director can do this with the DIN-2 Form.
The company should then inform the Registrar of Corporates (ROC) about the DIN of the concerned director through the DIN-3 Form. If there is any change in DIN or need for any correction like a change in personal details or address, the affected director should inform by submitting the eForm DIN-4 Form.
Step 2: Get Digital Signature Certificate(DSC)
To ensure the security or authenticity of documents filed electronically, the information act of 2000 requests for a valid digital signature on all the documents submitted electronically. This is the safest way to submit documents electronically. The digital signature certificate should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA). One should not use DSC given by any other agency which is not approved. Also, it is illegal to use another person’s DSC.
If there is an existing digital signature then it can be used and there is no need for a new one. However, there is need to check the validity of digital signatures. Agencies issue DSCs that are valid for only a year or two, after which it has to be renewed. The Digital Signature certificates can be received from the following government agencies: TCS, IDBRT, MTNL, SAFESCRYPT, NIC, nCODE Solutions etc.
Step 3: Create an Account on the MCA Portal
Creating an account is free, but there are charges that have to be paid for. The accounts can be used for several things.
Step 4: Apply for Company Registration
This step involves incorporating the company name and it is the last stage in company registration. It requires the applicant to register the office address or notice of situation of office and notice for appointment of company directors, manager and secretary.
