Starting a new business is not rocket science if one keeps the basic legal requirements in mind. The present article lists down the main legal formalities required to start a Company form of business in India.
There are many forms in which a business can be organized. Usually, the following models are popular:
- Sole Proprietorship
- Partnership ,including Limited Liability Partnerships called (LLP)
- Company – Public/Private
While there are certain processes that are common to any form of business organization, each one of the above has certain peculiar requirements. This article analyzes the requirements for starting a Company. These may vary from State to State and may change from time to time. Also a business may require additional (or not all of the below mentioned) registrations, compliance and certifications.
Incorporating your company
Name approval
The first step in getting your company registered is the approval of name for the Company. Generally, it takes about seven days to get the approval. The following steps are required for name approval:
You have to file an application in Form No. 1A with the Registrar of Companies (ROC) of the State in which the Registered Office of the Company is proposed to be situated. The application is to be signed by one of the promoters and must contain the following details:
Minimum 2 alternative names for the proposed Company. (The name can be coined names from the objects of the Company or the names of the directors, etc. but should definitely be indicative of the main object of the Company. Justification for the name needs to be specified along with the application).
Names and address of the members (minimum 7 for a public Company and 2 for a private Company).
Authorized Capital of the Company (Minimum Rs.5 Lac for a public Company and Rs. 1 lac for a private Company).
Main objects of the Company
On submitting the application, the ROC scrutinizes the same and sends the approval/objections in about 10 days to the applicant.
Director Identification Number (DIN)
Directors for an Indian company, both Indian and foreigners, must register and get identification number under the new requirements. It is called Director Identification Number (DIN). The application needs to be filed online.
The form along with the supporting documents (PAN Card & Residence proof duly attested by CA, Notary or Gazette Officer) is to be sent to the offices designated by respective ROCs.
The fee for obtaining DIN can be deposited online or deposited in banks authorized for this purpose.
Digital Signature Certificate (DSC)
Directors for an Indian company, both Indian and foreigners, are also required to get Digital Signature Certificate (DSC). DSC is required for all Directors or authorized representatives of any Company as well as the professionals who will sign ROC forms or documents.
Memorandum and Articles of Association (Memorandum and Articles respectively)
While the Memorandum states the main, ancillary/subsidiary and other objects of the Company, the Articles contain the rules and procedures for the routine conduct of the Company. The Memorandum also states the authorized share capital of the Company and the names of its first directors.
Memorandum and Articles also need to be stamped. The stamp duty depends on the authorized share capital.
Documents Required to be Filed with ROC
The following documents are required to be submitted to the ROC :
Memorandum and Articles - These are required to be executed by the promoters in their own hand in the presence of a witness in quadruplicate stating their full name, father’s name, residential address, occupation, number of shares subscribed etc.
Form No. 1 - This is a declaration to be executed on a non-judicial Rs 20 stamp paper by one of the directors of the Company or other specified persons such as attorneys or advocates stating that all the requirements of the incorporation have been complied with.
Form No. 18 - This is to be filed by one of the directors of the Company informing the ROC of the registered office of the Company.
Form No. 29 - This is the consent obtained from all the proposed directors of the Company to act as directors of the Company. (Not required in case of private Company).
Form No. 32 - This states the appointment of the proposed directors on the board of directors from the date of incorporation of the Company and is signed by one of the proposed directors.
Name approval letter in original.
Power of Attorney signed by all the subscribers to Memorandum authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
Power of Attorney in case of a subscriber who has appointed another person to sign the Memorandum on his behalf.
Applicable filing fees.
These documents need to be filed online first and then a physical copy should be submitted to the ROC.
Certificate of Incorporation
After the above documents are filed, the ROC calls the attorney on a specified date for scrutiny and making corrections, if any in the Memorandum and Articles filed. On complying with the same, the certificate of incorporation is sent by post to the registered office of the newly registered company.
Web resource : mca.gov.in
Income Tax related compliance
Permanent Account Number (PAN)
After incorporation, the Company must obtain its PAN. For this purpose, an application needs to be filed with the Income Tax Department in Form 49A with the necessary documents. PAN is mandatory for opening of Bank Account, filling of Income Tax returns and various other financial transactions.
Tax Deduction Account Number (TAN)
After incorporation, the Company must also obtain a TAN. For this purpose, an application needs to be filed with the Income Tax Department in Form 49B with necessary documents. TAN is required for depositing of TDS/TCS.
Web resource: incometaxindia.gov.in
Other Tax compliance
Value Added Tax
VAT registration is required for a trading business. This is to be applied for to the local Sales Tax Department in the prescribed forms along with specified fees and necessary documents. On completion of the formalities, a Tax Identification Number (TIN) is granted.
Professional tax
It is a tax on profession (including employment). Professional tax is applicable in some states in India and the rate of tax also varies from State to State.
Service Tax
Service tax is applicable on an entity which is engaged in providing prescribed services. There are more than 100 services on which service tax is currently applicable. The rate of service tax presently is 10%.
Web resource : exciseandservicetax.nic.in
Labor Laws
The Shops & Establishment Act
The Shops and Establishment Act is a State legislation and, thus, each state has its own rules for the Act. The objective of this Act is to lay down statutory obligation and rights of employers as well as the employees. Registration of shop/establishment is mandatory within 30 days of commencement of work.
Employees Provident Fund Organization
Provident fund registration is compulsory if the size of your workforce is 20 or more. The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in the prescribed form for allotment of Establishment Code Number.
Employees State Insurance Corporation (ESIC)
Employees’ State Insurance Scheme of India is an integrated social security scheme tailored to provide social protection to workers in the organized sector and their dependents in contingencies such as sickness, maternity or death and disablement due to an employment related injury or occupational disease.
The ESI Act, (1948) applies to the following categories of factories and establishments in the implemented areas:-
Non-seasonal factories using power and employing ten (10) or more persons.
Non-seasonal and non-power using factories and establishments employing twenty (20) or more persons.
The employer is required to provide necessary information to the concerned regional ESI department in the prescribed form for allotment of Establishment Code Number.
Miscellaneous
Importer Exporter Code (IEC)
IEC Code is mandatory for doing import or export.
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written by ajmal khan, August 21, 2011
written by joe, August 17, 2011
written by Kumar935, June 23, 2011
I am planning to start a computer training institute. please let me know what is the procedure needs to be followed and what type of registrations need to do.
Thanks in Advance
Kumar G
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written by Paras, June 02, 2011
written by kingshuk, May 30, 2011
As it is a sole proprietorship, i don't required registration certificate. i don't want to register for VAT or sale tax or service tax due to very small business volume (in terms of revenue).
Banks are asking for registration/VAT/Sale/Service tax certificate to open saving or current account in the mane of the business.
Please suggest what to do.
written by mandeep rathi, February 17, 2011
I would like to start my own mineral water manufacturing and bottling plant. I would also like to my own branding of the mineral water. can you guide me about, how to start and what are the special approval for water business from govt. Is there any subsidies from govt. to start that type of business.
Thanking you.
written by Mitrani, January 24, 2011
written by Prabu, January 24, 2011
Regards
Prabu
written by mahesh panwar, January 16, 2011
I would like to start my own mineral water manufacturing and bottling plant. I would also like to my own branding of the mineral water. can you guide me about, how to start and what are the special approval for water business from govt. Is there any subsidies from govt. to start that type of business.
Thanking you.
Regards
mahesh panwar
written by neeraj chandalwar, January 12, 2011
I want to know about to start company of corn and puff.
would you please give me required stuff for the same.
thanking you.
"Keep flag high"
written by Amit Dhakla, December 22, 2010
we r 3 partner & place is Bikaner (rajasthan)
written by mac, December 16, 2010
I want to open a Ladies fashion wear shop in mumbai. I plan to import the goods from abroad.
What is the procedure i need to follow. Please provide complete details as i'm very new to this.
written by Namdev, December 08, 2010
written by KULPREET, December 02, 2010
I m a student ,i found the above information very useful in my training.
Thankyou Sir
written by Amit Dhakla, November 19, 2010
i would like to open mustard oil & mustard oil cake mill. what are the leagal formality which are
required to full fill . and supposed place are bikaner (rajasthan) .please help me ......
written by Amit Anand, November 06, 2010
I would like to start my own mineral water manufacturing and bottling plant. I would also like to my own branding of the mineral water. can you guide me about, how to start and what are the special approval for water business from govt. Is there any subsidiries from govt. to start that type of business.
Thanking you.
Regards
Amit Anand
written by Vinesh, November 06, 2010
Vinesh
Director
Vinning Corporate Services Pvt. Ltd.
written by The corp, October 28, 2010
Ther Corporate Counsel Ahmedabad ,
written by Balaji Jawale, October 14, 2010
i want to start a new business of coal production. which is basically used for generation of electricity. but i do not no the how much money i should have. what are the legal requirements,and govt. scheme for this business.please give me reply as soon as possible.
written by Bhavesh Savla, August 22, 2010
Try forming a LLP instead of a Company. the REgistration costs come down a lot because Govt Fees come own substantially. also no minimum capital required.
written by Shivam nagariya, August 20, 2010
written by Ashfakur Rahaman, August 17, 2010
written by nilay parikh, August 15, 2010
written by sunil singh, August 10, 2010
written by Laura Mohiuddin, July 07, 2010
Thank you very much for this insightful post. I will be very grateful if you could let me know of additional steps involved if we wanted to start a solar panel assembly plant. My email address: laura@mashiurgroup.com. Looking forward to your reply.
written by gopalakrishna, June 21, 2010
written by richa shekhawat, June 17, 2010
thanking you
richa shekhawat
written by chirag ravariya, March 19, 2010
For all assistance / guidance for registering your limited company or limited liability partnership, you can contact ravariya.chirag@gmail.com or 9022698966/9664693626.
written by monica basu, March 09, 2010
written by HarishShrma, February 28, 2010
written by Richa Mahajan, February 04, 2010
Greetings!
I m Student this article helps me in compeleting my project in short time.
Thank you
Regards
Richa
written by Praveen Gaikwad, January 21, 2010
written by SHAIBAL BASU, January 18, 2010
written by eForms, December 19, 2009
lease agreements, Residential Lease Agreements are now available online.
written by Eddie_Isaac, December 17, 2009
written by MEMON, October 28, 2009
written by madhu madhu, October 26, 2009
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