Registering / incorporating a company in India can be a complex process, especially for entrepreneurs not having any legal background. This Article aims to provide a step by step guide on How to Register a Company in India.Â Before proceeding further, it must be borne in mind that registering a company, is not a mandatory requirement for setting up a business in India. It is perfectly normal and in some case advisable to start the business under sole-proprietorship / partnership firm and later on, convertÂ such business in an incorporated / registered company. There are many different kinds of business structures in India that you can choose from, which are as follows:
- a) Company
- b) Private Firm
- c) Sole Proprietorship
- d) Limited liability partnership (LLP)
Each form of business has its own advantages and disadvantages. However, even though registering a company in India may involve many tax and legal ramifications for the owners, it can be considered as theÂ ideal form of doing businessÂ in most of the circumstances. In India, registration of companies is regulated by the Companies Act, 2013. It is administered by the Ministry of Corporate Affairs (MCA) through Offices of Registrar of Companies (ROC) in various states.
How to Register a Company in India
A step by step procedure to register a company in India:
1 -Â First step is to get a DIN and DSC
Directorâ€™s Identification Number (DIN) is a unique ID number which given by MCA to the directors of the new incorporated company. Digital Signature Certificate (DSC) is a software version of identity proof. It supports in proving the identity on the record to the MCA in online form. It is mandatory to obtain the DSC for obtaining the DIN as per new Act. From now, any person wishing to get a DIN has to apply for a DSC first. The Identity Proof should contain any of the following:
- Driving License
- PAN Card
- Voter Id Card
The Residence Proof should contain any of the following:
- Driving License
- Voter Id Card
- Bank Statement
- Ration Card
- Telephone Bill
- Electricity Bill
2 – Second Step is to â€˜Get the Nameâ€™
This is a very important step as it gives an Identity to the company of incorporation. A name must reflects the objective of your business which includes, a unique name and checking of Trademark availability. Further, 6 different names have to be decided in a list (priority wise).
A maximum of 6 proposed names can be given, which are further verified by ROC.
3 â€“ Third Step is of MOA and AOA
Form 1 is an application for incorporation of a company. It includes creating of MOA (Memorandum of association) and AOA (Articles of Association). Every Company needs MOA and AOA.
MOA is a constitution of the company which contains:
- a)Â Â Â Â Â Name clause
- b)Â Â Â Â Â Registered office clause
- c)Â Â Â Â Â Objects Clause
- d)Â Â Â Â Liability Clause
- e)Â Â Â Â Â Capital Clause
AOA is also an important document and is filed in registration of private, unlimited and guarantee companies. AOA is the structure of the laws and regulations which will therefore be followed in the company after its registration.
4 â€“ Fourth Step is of filling of e-forms
Curently, there are two options at time of filing e-forms. Â You can either file E-form 1; E-form 18; and E-form 32 or single INC-29.
It is Important to note that the INC-29 hasnâ€™t Â yet replaced the old procedure but it is aimed to reduce communication with the authorities by the clubbing of formsÂ including DIN allotment, reservation of name, PAN & TAN, incorporation and ESIC registration.
It is further vital to note that INC-29 is not a STP form and INC 29 is only optional which means that the current incorporation process is also continued but now Company can be incorporated within 24 Hours after filling INC 29 with MCA portal. The new amendment has allowed only Single Name to be filed with 1 resubmission option, In case, the form is rejected then refund needs to be applied by Refund Form separately. Meanwhile. Section 8 Company are not included in this process. Maximum no. of DIN allowed in INC 29 is only 3. INC 22 can be filed separately whereas, the process of certificate of Commencement of Business will remain as it is.
5 â€“ Fifth Step is of Stamp the Co. documents
Stamp the Co. documents either at the superintendentâ€™s or authorized bank. Earlier, under Companies Act, 1956, only three to four documents were to be submitted to the ROC. The number now is 14-15. Almost every document including consent of directors, declaration from promoters from professionals have to be notarized.
6 â€“ Sixth Step is of getting the memorandum and article signed by at least 2 subscribers.
7 â€“ Seventh Step is to get the certificate of Incorporation
After the submission of all the documents. ROC will mention, if he is not satisfied with something or if something requires a change. If he is satisfied with the documents, he will issue the certificate of incorporation. It will indicate that the company is incorporated.
This Certificate provides the Registration Number. Private companies can start working after getting this certificate. There is an additional step for public companies to start functioning, which is yet to be completed.
8 â€“ Eighth Step includes making a seal
Making a company seal is not a legal obligation and it requires only 1 day.
9 â€“ Ninth Step is of attaining PAN
Every person is eligible to state his/her Permanent Account Number (PAN) for the tax payment under the Income Tax Act and the Tax Account Number (TAN) for submitting tax reduced at source. Using Form 49A, one can get PAN application with the approved copy of the certificate of registration, released by the ROC along with the identity and residence proof.
10 â€“ Tenth Step is attaining TAN
The allotment of a TAN must be registered using Form 49B. Tax Account Number (TAN) is for income taxes reduced at source from the Income Tax Department. The Tax Account Number (TAN) is essential requirement by anyone accountable for deducting tax. The conditions of Sec. 203 A of the Income Tax Act states that all individuals who subtract or collect tax at the source must file an application for a TAN.
11 â€“ Eleventh Step is for Registration with the Office of Inspector
Contains the employerâ€™s and managerâ€™s and the establishmentâ€™s name must be sent along with postal address and category with the applicable fees to the local shop inspector.
12 â€“ Twelfth StepÂ includes enrolling for Indirect Taxes such as VAT or Service Tax
13 â€“ Thirteenth step includes:
Registration with employeeâ€™s Provident Fund organization, this step is taken simultaneously with Step 12. It barely costs any fee and the time limit is not more than 12 days.
14 â€“ Fourteenth Step is of Registration with ESIC:
It is a kind of Medical Insurance. Time limit for it is not more than 9 days and this step is taken along with Step 12 and 13.
15 â€“ Fifteenth Step includes Govt. approval
This step is for foreigners and NRIs which requires filing for government approval before RBI. It takes almost half a month (15 days).
The revised Chart of Steps for Company Registration in India according to latest amendment to Companies Act, 2015 (using INC-29)
|Activities||Days||Cost in INR|
|Taking Directors Identification Number (DIN)||1||100|
|Taking Digital Signature of Directors||3||1500|
|Reservation of the name of the Company||2||500|
|Preparation of other Document (MOA,AOA etc)||2||NIL|
|Stamp the company documents||1||1,300
(200 for MOA + 100 for stamp paper) +(1,000 for AOA for every INR 500,000 of share capital or part thereof)
|Certificate of Incorporation||5||14,100|
|Make a seal||1||350|
|Register with the Office of Inspector (State/Municipal)||2||6,500
(2000 + Three times registration fee for trade refuse charges)
|Registration of (VAT)||12||5,100 (registration fee 5000 + stamp duty 100)|
|Registration of Employee Provident Fund||12||NIL|
|Registration of medical insurance||9||NIL|