Let us first understand different business types/structures:
Sole Proprietorship business: Solo Proprietorship business is most common among the small businesses in Delhi. In sole proprietorships, business is owned by an individual i.e. no partners or shareholders are involved in ownership. In sole proprietorships, owner’s liability is not limited i.e. personal assets of proprietor can be used to repay the creditors or other claims towards business.
One person Company (OPC): In One person company (OPC) one promoter starts a business and at the same time he/she wants to keep his/her liabilities limited by establishing a separate legal entity. It is a more formal and advanced version of sole proprietorship business.
Partnership Firm: In Partnership firms two or more people (called the partners) shake hands to come into a partnership agreement, to run a business. Partners contribute capital and/or possess different skills required to run the business. Partners share the profit and loss in the proportion as agreed between them. In partnership firms’ liabilities of partners are not limited. Partnership Firms are regulated by The Partnership Act 1932.
Limited Liability Partnership (LLP): LLPs are more formal and advanced version of Partnership firms, with a difference that in LLP liabilities of partners is limited to their contribution in the Limited Liability Partnership firm. Here it is important to understand that each individual as well as LLP are all separate legal entities. Limited Liability partnerships are registered with Registrar of Companies (ROC).
Private Limited Company (PLC): Private Limited Company is another popular business structure in Delhi that provides business the status of a separate legal entity from owners (i.e. shareholders). The liabilities of shareholders are limited to their share in the company. Private Limited Company is regulated under The Companies Act 2013 and are registered by Registrar of Companies (ROC) under Ministry of Corporate Affairs (MCA). This business structure is considered suitable when business wish to raise capital from investors in short or long term.
Public Limited Company/Public Company: Public companies are suitable for medium to large size businesses. This requires minimum seven shareholders/members to incorporate a Public Company. Public Company is usually incorporated if the founders of the business wish to raise capital from public. Since it is the structure which assumes investment from public, there are more compliances that a public company is required to meet.
Here are some key aspects that help in deciding right business structure:
1. Number of owners/shareholder: Every business structure has its own requirement or limitation in terms of number of owners that can contribute in the business, for example in OPC only one person can be owner, while in case of partnership firm or LLP there cannot be less than 2 partners. In case of Private limited company there can be 2 to 200 shareholders and for a Public Limited company there is minimum requirement of 7 shareholder however there is no maximum limit of shareholder in public limited company. Hence depending on the number of people interested in owning the share of business, one needs to carefully chose the right business structure.
2. How much liability owners can bear: In sole proprietorship, partnership firm and LLP, liability of owner/s is not limited, that means in case of business assets are not sufficient to payoff the debts/loans, then owner’s personal asset would be utilized to payoff the debts/loans or other liabilities.
3. Tax rate and other compliances applicable on any particular business structure: Tax rate and other compliances applicable on any business structure is another important aspect that business owners should consider while choosing the right structure for their business.
4. Source of funds required for business: Means of funds is very important factors in deciding the business structure, if the owners are willing to contribute entire funding on their own then Sole Proprietorship or Partnership Firm can be considered, however if founders are willing to raise capital from investors, then LLP or Private Limited Company could be better choice.
5. Business expansion plans for future: Business expansion plans also impacts of the decision of choosing the right business structure, for example if founder/s wants to expand beyond the national boundary registered entities such as LLP, Private Limited Company or Public Limited Company is considered much more trusted and eligible to incorporate entities in other countries.
Step 1. Obtain Digital Signature Certificate (DSC) for all directors and subscribers of MOA and AOADSC is mandatory for all the directors and subscribers.
Step 2. Registration on MCA portal One Director of the proposed company is supposed to register on MCA portal to initiate the process on MCA portal.
Step 3. Name reservation Select couple of names for the proposed company and file Part A of Spice+ form for reserving name of the company on MCA porta.
Step 4. Filing company registration application Once the name is reserved, it’s the time to file the forms for company registration. Following documents are required to be filed:
Step 5. Submission of forms Submitting the above forms after affixing DSC (Digital Signature Certificate) of the proposed director/s and declaration by professional.
Step 6. Payment of Fee Payment of registration fee, stamp duty is required to be done on MCA portal.
Step 7. Review process by appropriate authority Central registration Centre (CRC) reviews the documentation and decide application. If found everything in line, they forward the application to Registrar of Companies (ROC) for approval and registration of company.
Step 8. Issue of documents by Registrar of Companies (ROC) ROC registers the company and issues following documents:
1. Identification proofs of the directors and subscribers of AOA and MOA
- Aadhar Card
- Voter ID Card
- Driving License
- Passport (must in case of foreign national)
2. Address proofs of the directors and subscribers of AOA and MOA
- Utility Bills (recent utility bill i.e. electricity, water, internet etc.)
- Bank Account statement
3. NOC and address proof of the registration address for the proposed Company
- Latest Utility bill
- Rent Agreement and NOC from owner of the premises
- Latest Property tax receipt
- Sale deed or property registration documents (in case of owned property)
4. Memorandum of Association.
5. Article of Association.
Yes, you can register a Private Limited Company now and start functioning later after 6 months or one year. However, you need to make sure that compliances are done as per the provisions of the Companies Act even when you are not doing business. The compliances include preparation & filing of Profit and Loss Account, Balance Sheet, conducting Board Meetings, Annual General Meeting and filing annual returns.
No, Company can start the business only once the application is approved and Certificate of Incorporation (COI) is received.
Yes, a foreign national can be engaged as a Director in a Private Limited Company in Delhi. He/she will have to apply for Director Identification Number (DIN) from Government of India.
Yes, Company registration is an online process, so you can take our services even if you reside outside Delhi and even while you are out of India in any foreign country. Not just company incorporation services, but you can also take our other services like GST registration, compliance filings in India, Accounting etc. while you are outside Delhi, as most our services are based online.
Here is the inclusive list of some prerequisites to start the registration of a Private Limited Company in Delhi:
• A minimum of 2 Directors and 2 Shareholders (Please note the Directors can also be Shareholders).
• Photo copy of the PAN cards of all directors and shareholders (if Indian nationals) or photo copy of Passport (if, foreign nationals).
• DINs (Director Identification Numbers) of all directors.
• DSCs (Digital Signature Certificates) of directors and shareholders.
• Photo copies of the identity proof and address proof of all directors and shareholders.
• Address Proof (say recent utility bill) of the proposed registered office of the company (along with the No Objection Certificate from Landowner, etc.).
