Best 7 Types of Company Registration Ideas

A company is a corporation or legal entity created under the Companies Act 2013 Rules and Regulations. When setting up a business or an entity, it is necessary to check whether all the requirements for a business are fulfilled or not. After that, it is time to choose the right business registration method according to your business activities and activities.

However, if anyone is unaware of the types of company registration in India, don’t worry. In this article, we will learn in detail about the different ways of registering businesses and their registration process.

What are the different types of business structures in India?

The different business structures in India are as follows:

Before moving on to the different types of company registration in India, let us understand the district companies residing in the country. According to the Companies Act 2013 businesses are divided into several categories based on size, number of employees, responsibility, access to capital, etc.

• Types of enterprises by size: micro, small and medium enterprises
• Types of businesses by number of employees: private, public, and one-person company 
• Types of companies based on control: holding companies, subsidiaries, and associates company
• Types of companies according to liability: unlimited and limited by shares
• Types of companies according to the capital accessibility: listed and unlisted companies

What are the different types of Company Registration in India?

Any business or company must be legally registered under the Company Act 2013. There are altogether seven types of company registration in India. Due to multiple options, it is very difficult to choose the right company registration method.

However, we have created a comprehensive list of business registrations and their application process to facilitate the process of registering the business.

Briefly, there are seven types of company registration in India –

Private Limited Company

Generally, shareholders take equal responsibility for liabilities in order to protect their assets. In these companies, shareholders’ equity corresponds to all the shares held by each shareholder. Unlike many other corporations, the shares of a limited liability company cannot be publicly traded or transferred.

According to the Companies Act, 2013, a company is considered a private limited company if it meets the following criteria.

• It must be composed of a minimum of two directors and a maximum of fifteen directors.
• A director must be a resident of India.
• The minimum and maximum number of shareholders of the company must be two and 200 respectively.
• It should have a reliable capital fee of at least INR 1,00,000/-.
• It should have a registered office address in India.

Public Limited Company

Unlike private limited companies, the shares of a public limited company can be held by the common public. It is incorporated under company law and can be traded on stock exchanges without hindrance. These types of businesses must register for ROC certification before actively engaging in any business activities.

Limited Liability Partnership

LLP is a relatively new trend where business assets are completely different from personal assets and provide ultimate limited liability protection. In this company, the partners depend on the size of the authorized capital to pay their liability.

If someone wishes to establish a LLP, one of the important conditions is that one must maintain a minimum capital of Rs 1,00,000 with at least one partner in that country.

Sole Proprietorship

A sole proprietorship is nothing but a business run by one person. Generally, in sole proprietorships, the owner is responsible for all profits or losses. It is a sole proprietorship and it is quite easy to start a business. Most work-from-home or businesses running from home prefer this type of company registration.

Section 8 Company

These companies are commonly referred to as NGOs or non-profit organizations actively involved in charity work. The main objective of these companies is to promote art, science, and education, to protect the environment, and to help the poor.

Some conditions for obtaining registration of an NGO are that it must have at least two shareholders and directors. In most cases, shareholders take the liability as directors. Unlike many other businesses, it requires no capital. Each of the directors must be a resident of India and the company must be registered at an Indian address.

One Person Company

Sole proprietorship registration has recently entered the Indian market. Most small businesses or start-ups run by one person opt for this type of registration. With this registration, owners get liability protection, so they don’t even need a partnership.

It is relatively easy to maintain, manage, and manage because a single person controls all aspects of the business. In short, it is a mixture of a sole proprietorship and a limited liability company. The eligibility criteria for this registration is that the minimum amount of capital should be around INR 1,00,000/-. If a person is engaged in financial activities, then he/she will not qualify for registration with the OPC. and the person must be an Indian citizen.

Partnership Company

This type of company mirrors sole proprietorship in several ways. However, the main difference between a sole proprietorship and a partnership is the number of people involved. Partnerships are made up of two or more people, with the responsibilities of each member clearly set out in the contract.

Meanwhile, the partners also share the profits according to the agreement. On the contrary, the partners are also responsible for incurring losses similar to profits. These companies can carry out their activity even without a license if they have registered an act of partnership. Partnerships are governed by the Indian Partnership Act 1932.

Conclusion

Understanding the category of business to which the business belongs is the first and most important aspect a business owner should know before beginning the business registration process. The business owner and directors must choose the most suitable business structure. Choosing the wrong business structure can have a significant impact on individual and business finances, as each business structure has different requirements.