Company Formation and Registration Services in India

Company Registration in India

India is a country that occupies the greater part of South Asia. It is a constitutional republic consisting of 29 states, each with a substantial degree of control over its own affairs; 6 less fully empowered union territories; and the Delhi national capital territory, which includes New Delhi, India’s capital. India is the second most populated country in the world with over 1.3 billion people, which is roughly one-sixth of the world’s total population, India is a federal republic with regards to its political system. The citizens of India refer to themselves as the largest democratic state in the world. English and Hindi are the official languages of this state while, the official currency of India is the rupee.

The authority responsible for the registration and formation of companies in India is the Registrar of Companies (ROC), an office under the Indian Ministry of Corporate Affairs.

Registration Of Company In India: Legislative Framework

The Registrar of Companies (ROC) is an office under the Indian Ministry of Corporate Affairs that deals with administration of the Companies Act 1956 and Companies Act, 2013.

Business In India: Taxes

• The corporate tax is 30% (plus up to 10% of additional fee) for Indian companies (registered in the territory of jurisdiction);
• The tax rate for MSME is 25% for companies having profits less than Rs. 250 Crores in 2016/2017 fiscal year;
• 40% of corporate tax (plus 2.5% of additional fee) for foreign companies;
• 15-30% of income tax on salaries of foreign specialists;
• Due to tax on formation the amount of all taxes increases by 2%;
• 1% of tax on the total value of all property of the company (this does not include debentures).

There are also different types of excise duties like basic and formation fee; VAT in India varies from state to state. The tax is levied at each act of purchase/sale.

Bookkeeping in India

The bookkeeping system in India involves the following types of reports:

• Annual, that includes the company's balance sheet;
• Profit/loss, with the notes;
• Report of the Board;
• Report of the auditors;
• Accounting records indicating the fixed amount of received and spent sums, assets and liabilities of the company.

These reports reflect the true state of affairs within the company at the end of a fiscal year.

Business Registration Options: Types of Companies in India

Starting a business in India, these are the following types of business entities available:

• Public Limited Company: A public limited company or a public company is a type of limited liability company that offers its shares to the general public. A public limited company must have a minimum of fifty (50) shareholders. A public limited company are mostly on the stock exchange.
• Private Limited Company (pvt limited): A private limited company is a type of Limited liability company, whose shares are held by less than fifty (50) persons. These shares are not available to the general public. Most businesses that are privately incorporated are private limited companies.
• Limited Liability Partnership (LLP): it is a well structured business model as the separate legal entity from the partnership entity and business assets are separate from the personal assets of the partners. In case the business incurs losses, the personal assets of partners are not put at risk as the maximum liability of every partner is defined by his share capital in the entity.
• Partnership: This business is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations
• Sole Proprietorship: An entity run by a single person and generally employed in traditional businesses. The founder is completely responsible for the entire business with the business and the owner not separate from each other.
• One Person Company (OPC):  A company run by a single person(single owner) who is also the shareholder and the director. One Person Company (OPC) is a newly introduced type of company. OPC was introduced in the Companies Act, 2013 to support entrepreneurs who are capable of starting a venture or registering a firm, this allows them to create a single person economic entity.
• A Section 8 Company: A Section 8 Company of Companies, 2013 is the same as Section 25 company under the old Companies Act, 1956. Section 8 company is one of the most popular forms of Non- Profit Organizations in India. 
• Liaison Office / Representative Office: A Liaison Office could be established with the approval of the government of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly.
• Project Office: A foreign company planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.
• Branch Office: The branch office are involved in the following activities: Export/Import of goods, rendering professional or consultancy services, carrying out research work, in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.

Formation of a Private Limited Company in India: Advantages

• Business assets are separated from personal assets;
• Every shareholder is responsible for the share of the total capital;
• Transfer of shares is prohibited;
• Permissible number of founders is from 2 to 50 people;
• Emission of debt instruments or securities by involving natural persons is prohibited;
• Tax rates are set by the top values;
• Founders are free in making decisions in relation to the company’s operation;
• Open type of private company is admitted if:
• Open type company (or several companies) owns at least a quarter of capital paid;
• Company is engaged in taking of deposits from individuals;
• Average annual turnover exceeds $ 2.5 million.

Formation of a Public limited company in India: Advantages

• Free transfer of shares is allowed;
• Minimum number of founders is 7 people;
• There are no restrictions on attracting private investments;
• Taxes are set by the lowest rates.
• Formation of a limited Liability Partnership: Advantages
• The structure of LLP are more flexible to organize; 
• No limit on the number of partners in LLP;
• Raising and utilizing funds of an LLP solely depends on the partners (guided according to certain jurisdiction codes);
• LLPs are exempted from Dividend Distribution Tax (DDT);
• Professionals like engineers, chartered accountant, lawyers and doctors may prefer this form of business partnership;
• No requirement of compulsory audit in LLP.

Formation of a Proprietorship: Advantages in India

• Easy and least expensive structure of business to startup and run.
• Full ownership and decision making of the business;
• A better tax and accounting operation - there is no need to file a tax return as income generated are categorized as personal income tax.
• All profits are a 100% yours. 

Formation of Partnership in India: Advantages

• The structure of this business makes it a little easier to start up and operate.
• Better productivity due to workload share or division of labour.
• The opportunity to offer future key positions in the company is one that can bolster the long term plan for the company.

Formation of One Person Company in India: Advantages

• Tax exemption for the first 3 years; 
• Higher benefits on depreciation;
• No tax on dividend distribution.

Formation of Section 8 Company in India: Advantages

• Tax exemption as a non profit organization;
• Minimized Share capital;
• Ease at transfer of title/ownership.

Company Registration Requirements in India: List of Documents Required for Incorporation of a Company

• Certified copy of the Charter or the Founding Agreement. In case of the translation of documents into English notarization of the translation is also necessary. Address of registered or principal office.
• List of managers and secretaries of the new company.
• Data on residents of India, entitled to make decisions in the company (names, surnames, addresses).
• Full address of the place where the company's activities will be carried out.
• Company’s name.
• Primary, ancillary and other objectives and purposes of the company.
• The amount of authorized and registered capital.

How to Register a Company in India: Step by Step Process of Formation and Registration

Step 1: Acquire Director Identification Number (DIN);

Step 2: Acquire Digital Signature Certificate (DSC);

Step 3: Approval of company’s name (Availability of names, check to see if the name is distinct);

Step 4: The certificate of incorporation.

Indian Company Formation FAQs

• How much does it cost to register a company in India?

The cost of registering a company in India is $3900. the total cost includes the preparation of legal documents, company registration, payment of all taxes and fees at the time of registration and legal address for the company (a year).

• How many types of company registration can be done in India?

 There are mainly six types of company registration that can take place in the Republic of India, they include: Limited Liability Company, proprietorship, partnership, Limited Liability Partnership One Person Company and Section 8 company.

• How long does it take to register a company in India?

The registration and formation procedure of a company in India depends on the type of company, the region or state of business incorporation, it generally ranges from five days to fourteen days.

• How can I register a company name in India?

The registration of a company name begins with the filing of the appropriate documents, Law&Trust helps with preparation and compilation of the necessary documents ensuring it meets the requirements set out by the ROC, when it comes to the approval of a company name.

• Can I start a business without registering it in India?

It is not possible to start a business or company in India without registration. A license is needed for you to operate as a legal entity in this territory.

• How to get online SSI Registration in India?

Getting an SSI registration (online company registration) or Small Scale Industry registration is approved by the Ministry of Micro, Small and Medium Enterprises through the directorate of industries of the state government.

• How can I check a registered company in India?

The status of a registered company (including a small start up company) can be checked with the ROC of India, Lawyers of Law&Trust work together with the Registrar of companies to verify its status.

Why Incorporate with Law&Trust International?

Benefits of incorporating with Law & Trust International in India includes:

• Full range of related services: Provision of a full range of legal, corporate, government, and business intelligence related services in the territory of India. A detailed overview of our services includes full legal support during the company registration procedure, obtaining a legal address, interaction with the official government authorities of India, state fees, legal address of the company for a year, production and registration of company stamps and advising the client as part of the registration process. Opening a bank account and the cost of this service are discussed during the consultation.
• Professionals and expertise of Law: Worldwide registration and legal maintenance of companies, accounting services, and audit, tax planning and optimization, trademark and patent registration, and many more. Law and Trust provide the client with the best company incorporation services.
• Domestic service: Law&Trust ensure our services cover every region in India. Be rest assured that no matter where the company intends to incorporate in the Republic of India, we’ve got the location covered.
• Free initial advice: Free consultation from the lawyers of Law&Trust International regarding strategies or the provision of services for analyzing and developing a legal position on an issue the client raises anywhere in the world.
• Confidentiality: Law&Trust makes use of modern technological features to keep the records and details of every client safe.
• Efficiency and productivity: Strategically providing up to date personalized services to help your business succeed.

Ready For Company Incorporation?

If you are interested in registering and incorporating an offshore company in any jurisdiction around the world, contact Law & Trust International by simply sending an email or call now to take your business to the next level!