India is a leading Market Place to sell goods & services worldwide, having the significance of being considered as the second largest populated country in the world after China. Among the wide range of businesses flourishing in the country, the electronic gadgets, clothes, and other accessories remain the top sellers. However, registering a New Company or Firm in the country of India is a matter of questions. The article discusses the process of registration and the possible options for a group or an individual for starting Start-ups in India.
By: Syed Suhaiba Geelani, 4TH-year B.A.L.L.B, (Five-year law), University of Kashmir.
Beginning with the definition and difference between Company and firm, Company is a legal entity formed by a group of individuals to engage in and operate a business, commercial or industrial enterprise, while as a firm is a business organisation such as a corporation that produces and sells goods and services intending to generate revenue and make a profit. Usually, people refer to both the terms as same, but there lies a huge difference. The Company carries a separate legal entity while the Firms doesn’t carry any.
For Profit-making businesses in India, one needs to register themselves with any of the five agencies below:
- A company under Companies Act, 2013.
2. A firm under the Indian Partnership Act, 1932.
3. LLP under the Limited Liability Partnership Act, 2008.
4. Cooperative housing Society under Co-operative Societies Act, 1912.
5. Hindu Undivided Family (HUF) under the Hindu Succession Act, 1956.
Before registering with any one of them, one needs to also look out for their advantages and disadvantages. And after that, go-ahead for the registration process. The process is usually time-consuming, as all the important documents are required in the registration process. The frequency of registrations, approvals and documentation is required to complete the process of registration.
Over a period of time, India has been trying to reduce its norms and guidelines of compliance to attract more NRI and HNI investors towards the country.
Registration of firm under the Indian Partnership Act, 1932
A type of business, in which two or more people mutually start a business with minimal compliances subjected to the maximum number of partners. The registration of such a partnership firm is not mandatory, but in some states including Maharashtra and Gujarat, the partnership should be registered. However, it’s always legally advisable register the partnership.
Procedure for registration under Partnership Firm
Submission of an Application to the Registrar:
The person willing to go for the registration needs to duly Fill Form A (Physically or Online) and submit it to the registrar in the prescribed format within a reasonable time duration.
The application must contain certain important details regarding the firm. Those details include:
- Name of the firm, along with Name and address of all the respective partners.
- Complete address of the business, including that of main and all branches of the Firm.
- Joining date of partners and their shares in the business of whatsoever nature.
- Time Duration of the Date of Commencement of Firm and their respective business.
File the Partnership Deed to the Registrar:
Secondly, the partnership deed shall be submitted to the registrar. In the deed, the partners involved in the course of the partnership should agree to terms and conditions, and subsequently follow them during the business.
Payment of the Fees:
The person needs to pay or deposit the fees required for the registration process, including expenses of stamp duties.
Approval of the Application:
After the completion of the above steps, it remains at the discretion of registrar to decide whether or not, the application can be approved. Once approved, you’ll get the certificate of incorporation. After this, once can proceed ahead.
For fast-track registration, one should always keep all required documents handy to prevent any hindrances during the documentation process.
Registration of Company under Companies Act, 2013
Registration of Company under Companies Act, 2013 requires a few steps of registering our business on the website of Ministry of Corporate Affairs (MCA). On opening the website, you’ll get all the relevant information and links available on www.mca.gov.in
For the process of registration, all promoters and directors shall have two important things.
- Digital Signature Certificate (DSC).
- Director Identity Number (DIN) for filling an e-form.
Procedure for Company’s Registration:
Approaching to Ministry of Corporate Affairs (MCA):
The process of reaching to this level has been simplified with the use of SPICe Plus.
SPICe is an abbreviation for Simplified Proforma for Incorporating a Company Electronically and as the name suggests itself, it refers to an application form for incorporating or registering a company with MCA.
SPICe form has been replaced by the advanced SPICe plus PDF form.
MCA SPICe Plus: The old Form SPICe+ (SPICe Plus) – It is a single application which helps to receive all approvals by the advantage of a single form. It consists of two parts, A & B, which are specified below.
Part A of Form is Reservation of Name (In case, the company is getting newly incorporated) while as
Part B of Form: Incorporation of a new company- This process is being done by filling the Application; Applying for DIN allotment- If the director doesn’t have an existing one, it needs to be applied; Bank Account Opening- The account should be opened on the company’s name; TAN – Tax Deduction and Collection Account Number- This is a ten-digit number which will be required for deduction and collection of taxes; EPFO- It deals about the necessary arrangements for Employees Provident Fund; GSTIN- having the punchline of One Nation, One Tax. It is an integrated payment method for Indirect and Direct taxes.
The GST number is important for running a business; Memorandum of Association under Section 4; Article of Association under Section 5.
List of documents required before submission of form:
- DIN of all the directors associated with the proposed company
- DSC – Digital Signature Certificate
- Name Availability Certificate (Part A of Form can be skipped if one has availed name availability certificate from the Registrar)
- Memorandum of Association (MOA) and Article of Association (AOA) in electronic form.
Once you submit the form, it remains subject to the approval of the registering agency. Following the approval, the Incorporation Certificate is provided to the business, and then after the business stands Incorporated.