Startup Registration

Sanjay Sharma
Private Limited Company
• By definition, a Private Limited Company is “privately” owned by at least two owners
and directors whose liability is restricted to the number of shares owned by them. The
company is considered as a separate unit than that of its owners. It is the most convenient
way of establishing new businesses.
• Characteristics like being able to raise funds through investors, operate after the owner’s
death and lesser tax liabilities make it a preferred choice among business owners to make
a foray into the competitive market.
• Private Limited Company is a private company held by the individuals or group of
persons to run their business smoothly by incorporating the company under the laws
of Companies Act, 2013 in India. Most entrepreneurs are opted this entity by thinking
about the scope of growth and expansion as compared to LLP and Partnership. It secures
all the advantages of partnership as well as limited liability.
• https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
 Advantages of Private Limited Company
Separate Legal Borrowing Capacity Limited Liability Owning Property Easy Transferability Easy Debt Access
Entity
The company will be A company can get or Limited Liability The ownership of any Transfer of ownership A company has the
treated as a separate or borrow the available means the liability that property like land, in private company is ability to access the
distinct legal entity amount of money/ should not exceed the building, objects, not so difficult, finance from the
from its members finance by issuing amount invested in a intellectual property because you know that outside by considering
(Directors/ debentures to public. company. For every and etc. may be a corporation is a its strength. It has
Shareholders/ Anyway the lenders company, the liability legally acquired separate legal entity huge opportunity to
Promoters) in the eyes also get pledged on should be legally privately or publicly. from its owner; if the access debt from
of law and it has the company to determine limited to their Like same, this is a owners (Director) of a financial institutions,
ability to enter into the about the borrowing respective current great thing in private limited venture capitalists,
agreements or capacity on the basis status. The liability is company law that a company wants to exit bankers and etc. by its
contracts in subject to of the company’s limited to the private company can from business can own advantages. And
certain duties and current status as a members of private acquire the property handover his/her stake a Private Limited
obligations, to sue or security to pay back limited company and assets by its own to the new owner or Company has more
to be sued of its own his money within a according to their name. The company partner by selling their debt opportunities to
rights. The company specified time period. amount of shares held has the right to proposed shares and go ahead with board
has separate legal Apart from this, banks by them respectively property or right to stocks; is same as in of certain plans rather
personality; this and financial where own property is case of Shareholders than Limited Liability
feature isolates the institutions preferred shareholders/members similar as human right also. Partnership (LLP) or
activities of the to provide financial are legally obligations for natural person. One Person Company
company from assistance as the for the liability of a (OPC).
individuals or other company separates company only to the
company. from its owner. extent of their nominal
value of shares.
Limited Liability Partnership (LLP)
• A Limited Liability Partnership (LLP) is a company formed by two or more partners having
limited liability towards the business. This implies that each of the partners in business is not held
responsible for the other’s actions or wrongdoings. All partners together share the profits and losses
generated by the business. This form of business was brought into force in 2008 by the Limited
Liability partnership Act.
• LLP companies usually do not have general partners where all business owners have unlimited
liability. Here, all partners are involved in the running of the business with restricted liability.
Though the procedure is by and large similar, a few states might have slight variations in the
regulations, for instance, some might give LLP registrations only to professionals such as chartered
accountants, advocates etc.
• http://www.businesswindo.com/llp-limited-liability-partnership-registration.php#popup
• http://www.mca.gov.in/Ministry/actsbills/pdf/LLP_Act_2008_15jan2009.pdf
 Benefits
Separate Legal Entity Borrowing Capacity Limited Liability Owning Property Easy Transferability Dual Relationship

This advantage tells A LLP, which is an Liability means a As LLP is a legal Due to the feature of An LLP combines the
that an LLP is a legal artificial legal person person/ member/ entity, it has the Separate Legal Entity, advantages of both
business entity which by law; it has the partner of an capability to own funds an LLP is a separate Partnership and as well
separates from its ability to get debt from organization/ company and can acquire other personal entity from its as the Company into a
designated national financial is being legally properties by own managing partners/ single form of
partners/members as institutions, banks and responsible for his or name whether it is owners. This organization; so this is
similar to Pvt Ltd; can venture capitalists as she owes; so the movable or immovable designation of partners/ the fact, that any
take participate on per the company status partners of LLP have and tangible or members and all its member of the
corporate world to but cannot get limited liability to their intangible. The shares of stocks can be company came into an
emerge its necessity. It investment company and are liable property of LLP is not transferred to new effective written
has wide legal capacity opportunities from to pay a limited amount the property of allowed partner by the contract to carry off
to enter into contracts, Foreign Institutional of debt that acquired partners, all right rules & regulations of various roles or
can acquire properties Investors (FIIs) and from the company as reserved for LLP company laws under positions during the
by own name and also Foreign Venture mentioned in Company. So, no the LLP Act. LLP has same working time like
can get debt from Capital Investors agreement. Each partners would make the flexibility to be a partner, creditor,
outside. Most (FVCIs) as compared partners or members in any claims about the transfer ownership supplier and also an
advantage is that the to private limited LLP are responsible or property during the easily. employee of the LLP.
partners are no liable to company. So LLPs are liable for their debt but business concern.
such types of debt, it not allowed to raise not for another
counts to company. foreign currency loans, partner’s negligence or
but can attract nation’s misconduct.
capitalists.
One Person Company Registration
• A OPC is a type of Private Limited Company where minimum and maximum number of
members is one. The One Person Company (OPC) was recently introduced as a strong
improvement over the sole proprietorship OPC has limited liability of its members unlike
in a partnership firm. It gives a single promoter full control over the company while
limiting his/her liability to contributions to the business. This person will be the only
director and shareholder (there is a nominee director, but with no power until the original
director is incapable of entering into contract). The OPC is one of the most credible
structure and preferred over a Proprietorship.
• http://www.businesswindo.com/opc-one-person-company-
registration.php#popup
 Advantages Of One Person Company Registration
Separate Legal Borrowing Limited Liability Owning Property Easy Dual Relationship
Entity Capacity Transferability
A company is a legal A company enjoys Limited Liability A company being a Shares of a company In the company form
entity and a juristic better avenues for means the status of juristic person, can limited by shares are of organization it is
person established borrowing of funds. being legally acquire, own, enjoy transferable by a possible for a
under the Act. It can issue responsible only to a and alienate, shareholder to any company to make a
Therefore a company debentures, secured limited amount for property in its own other person. Filing valid and effective
form of organization as well as unsecured debts of a company. name. No and signing a share contract with any of
has wide legal and can also accept Unlike shareholder can transfer form and tis members. Thus, a
capacity and can deposits from the proprietorships and make any claim handing over the person can at the
own property and public, etc. Even partnerships, in a upon the property of buyer of the shares same time be a
also incur debts. The banking and limited liability the company so long along with share shareholder, creditor,
members financial institutions company the liability as the company is a certificate can easily director and also an
(Shareholders/Direct prefer to render large of the members in going concern. transfer shares. employee of the
ors) of a company financial assistance respect of the company.
have no liability to to a company rather company’s debts is
the creditors of a than partnership limited.
company for such firms or proprietary
debts. concerns.
Partnership Firm Registration
• A partnership firm is usually formed by two or persons to carry on a business legally. The
“partners,” as the business members are called, share the profits or losses of the business. The
business can be conducted by all partners or by just one of them on behalf of all the rest. The
partners of the business get into the business by forming the Partnership Deed, a legal document
laying down the guidelines for conducting the business and other details pertaining to the business
and its formation. It also mentions capital contribution by each partner and the proportion in which
they share the revenue or loss from the company. The partners are bound by the Deed and non-
compliance to it is considered going against the interest of the business and other partners. All
partnership firms fall under the governance of the Indian Partnership Act, 1932, section 4.
• In India, you can find there are 3 types of partnership as follows
• Unregistered Partnership Deed
• Partnership Registered with Registrar of Firm
• Limited Liability Partnership
• http://www.businesswindo.com/partnership-firm-registration.php#popup
Sole Proprietorship Firm
• As the name suggests, a sole proprietorship firm is formed by one individual, called the
“proprietor” who will be solely responsible for the business and its transactions. A sole
proprietorship firm does not enjoy a distinct legal entity unlike a private limited company or a
limited liability partnership. The owner or the proprietor and the firm are treated as one unit; that
is, the firm and its owner are not different from each other. To open a sole proprietorship firm, the
proprietor needs to choose a name for his or her business and a place to carry out the business.
There are no legal formalities involved and even registering a sole proprietorship firm is not
compulsory.
• http://www.businesswindo.com/proprietorship-firm-registration.php#popup
Advantages
• Easy To Start
• Full ownership and control.
• Less capital involved.
• Profits are not to be distributed.
• Ease of formation.
• Complete control over all the aspects of business.
• Strong Interpersonal relationships with clients, customers and
employees.
• Low Income Tax.
Public Limited Company Registration
• A Public Limited Company, generally called Public Company' is company incorporated under
Companies Act 2013 . The liability of shareholders is limited to the capital invested. As the name
reveals, public limited company has a wider coverage than a private limited company. Public
Limited Companies are those types of companies where minimum number of members is seven
and there is no cap on the maximum number of members A limited company grants limited liability
to its owners and management. Being a public company allows a firm to sell shares to investors
this is benificial in raising capital. A minimum of three Directors are required for establishing a
Public Limited Company and it has more stringent regulatory requirements compared to a Private
Limited Company. A public limited company has all the advantages of private limited company
and the ability to have any number of members, ease in transfer of shareholding and more
transparency. Identifying marks of a public limited company are name, number of members,
shares, formation, management, directors and meetings, etc.,
• http://www.businesswindo.com/public-limited-company-registration.php#popup
Advantages of Public ltd company
• Subject to the compliance of the Companies Act, the Company can issue shares to public
• Subject to the compliance of the Companies Act, it can accept deposits from public.
• Easy to get public money
• Most credible
• Ideal for companies intending to float IPO
• Minimum number of shareholders is 7. There is no restriction on maximum number of
shareholders.
• Minimum number of directors is 3
• Shareholders of a public limited company can transfer their shares
SECTION 8 NON-PROFIT ORGANISATION
• The concept of non-profit making company is quite old in India. In erstwhile Companies Act, 1956
it was regulated by Section 25 and that is why it was popular as Section 25 Company. However in
Companies Act 2013 provisions related to non-profit making company are given in Section 8 read
with Rule 19 and 20 of Companies (Incorporation) Rules, 2014. Under Indian law, 3 legal forms
exist for NGO or Non-Profit Organizations Trusts, Societies, Section 8 Companies. Due to
better laws, Section 8 Companies have the most reliable strongest organizational structure Indian
Trusts have no central law, Indian Societies have different legal and institutional frameworks from
state to state. Indian Companies including Section 8, have one uniform law across the country
Companies Act, 2013. It is this robust Act that regulates the formation, management and
accountability of a Section 8 company, thus making it more closely regulated and monitored than
trusts and societies, and recognized all over the world.
• http://www.businesswindo.com/section-8-company-registration.php#popup
• These companies incorporated only for promotion of commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of environment or any such other object.
Difference between LLP & "traditional partnership firm"

• Under “traditional partnership firm”, every partner is liable, jointly

with all the other partners and also severally for all acts of the firm
done while he is a partner.
• Under LLP structure, liability of the partner is limited to his agreed
contribution. Further, no partner is liable on account of the
independent or un-authorized acts of other partners, thus allowing
individual partners to be shielded from joint liability created by
another partner’s wrongful acts or misconduct.
Difference between LLP & a Company
• A basic difference between an LLP and a joint stock company lies in
that the internal governance structure of a company is regulated by
statute (i.e. Companies Act, 1956) whereas for an LLP it would be by
a contractual agreement between partners.
• The management-ownership divide inherent in a company is not there
in a limited liability partnership.
• LLP will have more flexibility as compared to a company.
• LLP will have lesser compliance requirements as compared to a
company.
Minimum Requirements for an LLP
• To start with, an LLP needs to have a minimum of two partners
comprising individuals or body corporate and a minimum of two
Designated Partners of which one must be an Indian resident. Apart
from these, to form an LLP, the members need to obtain a Digital
Signature Certificate (DSC), finalize a company name, outline an
agreement and have a registered office. There are several listed
consultants that can help one with LLP Registration in Bangalore and
other cities at minimal cost.
Documents Required for LLP Registration
Why a Startup Should be an LLP
• An LLP is a perfect choice for startups due to its fewer regulatory compliances and cost-effectiveness.
• An LLP makes sure that the reign of control stays within the members of the firm which is absolutely
essential in case of a startup.
• Startups venturing into the services and digital sector will be particularly suited for an LLP.
• LLP brings together the advantages of partnership model with limited liability. Although many new
entrepreneurs want their companies to register as private limited companies, the benefits of LLP are no
less.
• In fact, LLPs are more suited for businesses whose operations need to be managed closely, who have
limited funds and who want to enjoy the profits from their businesses directly, all these with limited
liability.
• To register a Limited Liability Partnership (LLP) in Bangalore and metro cities like Mumbai, Delhi etc,
startups can take the help of verified and registered consultants.
• Business owners should however, weigh the pros and cons of an LLP thoroughly before taking the
plunge.
• They should keep in mind the time and cost involved to get an LLP registered, the tax implications,
books of accounts to be maintained, the “Deed of Partnership” that needs to be formed, etc.
• If decided with clear business objectives in mind, an LLP will certainly be the best for startups given its
characteristics and advantages.
• http://www.mca.gov.in/MinistryV2/incorporation.html
Compare Company Registration Options