Start-up founders are extraordinaire technologists, designers, and visionaries, with degrees from one of the best colleges in the country. Nonetheless, many of them are oblivious of the basic legalities concerning starting a new business—for example, the suitable type of business registration. As the start-up founder, the last thing you want is getting penalized over the minor legalities that you might have missed as you were mainly occupied with expanding and strategizing your business in the market.

The first thing you should do as the business founder is to register as the company when you go abroad on your start-up odyssey. Mainly there are four types of companies you can choose from which includes online LLP registration in India, One person company (OPC), a private limited company (PLC), and a public limited company.

If you prefer to initiate your new business and cannot recognize which structure would work best for you, it is suggested to connect with the professional. But as the founder, before taking that step, it is crucial to know the several categories that are suitable and ideal and the process to register under that as given below.

– One-person company (OPC)

Lately, formulated in 2013, the one-person company, OPC, as it is commonly known, it is the top way to start the company if there is only one owner. It facilitates the sole owner to carry on their work and yet be a part of the corporate structure. It is suitable for sole owners those who are looking to limit their liability. Also, you will receive a tax holiday for the first three years under the start-up India. High advantages on depreciation. No tax will be levied on dividend distribution. The legal conformity will be the business returns to be submitted to limited RoC compliances.  

– Limited liability partnership (LLP)

It is the independent legal body. When businesses choose to get online LLP registration in India, they are opting to limit the liability of partners. These liabilities are limited only to the extent of their agreed contribution.

It is suitable for service-oriented businesses that have less investment needs to run the business. Also, you acquire the benefits of depreciation and the legal compliances that are business tax returns to be submitted to RoC.

– Private limited company (Pvt. Ltd.)

In the eyes of the law, this firm is considered as the separate legal entity of its founders. It includes the shareholders (stakeholders) and directors (company officers). Each person is looked upon as an employee of the firm. It is suitable for businesses that have high revenues. The tax holidays for the first three years under the start-up India will be allocated. Also, the legal requirement, business tax returns to be submitted to RoC, and the compulsory audit.

– Public limited company

It is the voluntary organization of the members which is included under the company law. It has an independent legal entity, and the liabilities of its members are constrained to the shares they hold. It is suitable for businesses with a high turnover. Tax can be exempted. The business tax returns require to be submitted along with a compulsory audit.

Other types of business structures include Hindu undivided families, sole proprietorship, and partnership firms. Remember that these structures do not fall under the purview of company law.

How to opt for the business structure while seeking to register the business in India?

Here are some of the questions you might have encountered in the registration process.

Q – how many associates will your business have?

If you are a single owner, the OPC would be suitable for you. But if your business has two or more owners, then you should opt for LLP or a private limited company.

Q – income tax rules applicable to businesses.

In the case of company and partnership, the tax rate will be at 30%, which does not apply to a sole proprietorship.

Q – plans on obtaining money from investors.

It is tough to obtain investments in start-ups, especially when your business is unregistered. Units such as private limited companies or LLP are the most trusted when it comes to investment.

Q – does your initial investment decides your choice of business structure?

Yes, it must; if you want to spend less initially, it would be good to opt for sole proprietorship or partnership. Nonetheless, if you are sure of recovery of costs, then go with OPC, LLP, or a private limited company.

Q – willingness to bear the complete business liabilities.

Business structures like partnership or sole proprietorship firms have unlimited liability. In contrast, LLPs and companies have a limited liability clause and are restricted to their contribution.

Company registration in India

When comes to starting up, it is recommended to follow key tips to plan your company registration better. But, in general, there are 4 key steps involved in the process –

– DSC (digital signature certificate).

– DIN (director identification number).

– Registration on the MCA website or new user registration.

– Start-up certificate.

Registering your business with the proper structure plays a crucial role in its success later. That’s why it is advised to conduct your own research and choose the right course.