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Initial Capital of the Company

How many Directors don't have DIN

How many Directors don't have Digital Signatures (DSC)

Whether the Member and Director are same person

Please Select State of Registration

Select Type

Initial Capital of the Company

How many Directors don't have DIN

How many Directors don't have Digital Signatures (DSC)

Whether atleast 1 Director is also a Shareholder

Please Select State of Registration

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Practically the most credible form of business, a company is registered in accordance with the Companies Act and is a separate legal entity, distinct from both its shareholders, directors and managers. The liability of the shareholders is limited to the amount paid or unpaid on issued share capital. A company has unlimited life and no limit is placed on the number of shareholders. The Companies Act, 2013 does, however, place many restrictions on the company. It must maintain certain books of accounts, appoint an auditor and file an annual return with the registrar of companies which includes the accounts as well as details of directors and mortgages.

There are basically three types of Companies

Public Limited Company

Public Limited Company means a Company which is not a private limited Company and has a minimum Authorized Capital of Rs 5 Lakhs. It does not carry the word 'private' in its name and also do not have the restrictions as carried out in the private limited companies. A Private Company which is subsidiary of Public Company also functions as Public Companies.

Private Limited Company

Restricts the right to transfer its shares

Limitation to the number of shareholders to 200 (excluding employees and former employees)

Prohibition towards invitation to the public to subscribe to shares and debentures

Prohibits acceptance of deposits from persons other than shareholders, directors and their relatives.

The minimum paid up capital for a private Company would be Rs. 100,000

OPC

"One Person Company" as name suggests means a company which has only one person as a member.Minimum paid up share capital of One Person Comppany is Rs. 1 Lakh. OPC can appoint maximum 15 directors,but minimum should be one director. While registering an OPC,the person has to be nominate a person who will manage the company in the case of death or incapacity to contract of the sole member.
Every One Person Company should be the better Private Limited (OPC) in brackets after its registered name, whenever it may be private,affixed or engraved.


Before taking any decision in respect of incorporating a Company for carrying any business, it is necessary to analyze the benefits and drawbacks of the Company, which are outlined below:

Benefits-

The benefits of company arises from the features it comprised off

Liability: A Company exists as a separate legal entity from your personal life. Both company and person who own it are separate entities and both functions separately. Liability for repayment of debts and lawsuits incurred by the Company, lies on it and not the owner. Any business with potential for lawsuits should consider incorporation. Incorporating will offer an added layer of protection

Perpetual Succession: An incorporated company has perpetual succession. Notwithstanding any changes in the members of the Company, the Company will be a same entity with the same privileges, immunities, estates and possessions. The Company shall continue ton exist till its wound up in accordance with the provisions of the relevant law

Easy Transferable Ownership: The shares and other interest in the of any member in the Company shall be a movable property and can be transferable in the manner provided by the Articles, which is otherwise not easily possible in other business forms. Therefore , it is easier to become or leave the membership of the Company or otherwise it is easier to transfer the ownership

Separate Property: A Company as legal entity is capable of owning its funds and other properties. The Company is the real person in which all the property is vested and by which it is controlled, managed and disposed off. The property of Company is not the property of its shareholders


Taxation: Another main benefit to incorporating is the taxation of a Company. Companies are often taxed at a lower rate and are provided with better taxable benefits as compared to other forms of business organization.

Raising Money: Financing a small business as a sole proprietorship or partnership can be difficult. A Company can sell shares of the Company to the public or can accept deposits from public and can therefore raise money easier than other business structure types. The modes of financing business carried on by company are numerous Moreover, since the companies are governed by particular law and have to comply with stringent disclosure norms, therefore they enjoy good creditworthiness with various financial institutions

Selling the Business: A non-corporate business is hard to valuate properly. A business Corporation value will be based on the business, not the owner, therefore making it easy to sell the Company.

Capacity to sue As a juristic legal person, a Company can sue in its name and be sued by others. The managing director and other directors are not liable to be sued for dues against the Company.

Better Governed:Companies are governed by Companies Act, 1956 and have to follow various regulatory procedures during the course of its governance, moreover they have to comply with stringent disclosure norms which let to better governed organizations and creation of value for owners.


Drawbacks +

Costly to Form and Run:In comparision to other business forms, it is costly to incorporate and run a Company. Lot of compliances is required to be carried every year and therefore the cost of running is also high in comparision to other forms. Moreover heavy fines and penalties has been prescribed for the non compliance.

Regulated form of Business: Company is highly regulated form of business , as lot of compliances like maintenance of various registers , holding of meetings are required to done each year and for undertaking various activities or decision , it is necessary to obtain the permission of specified number of shareholders and in some , of regulatory authorities also. The Companies Act 1956 also prescribes various provisions how the company will be managed and run.

Audit and Financial Disclosure:It is necessary for all the companies to get its accounts audited annually and to prepare its balance sheet and profit and loss account in accordance with the prescribed guidelines. Lot of information as to the financial condition of the business is required to be disclosed and moreover, all such documents are available for public inspection, therefore it is not possible to maintain financial secrecy of the business.

Lack of Control: In case of companies, the ownership and management is divorced, in order words, it is not necessary the people owning the company are also managing it. The Company is managed by Directors, which are appointed by the shareholders. The Directors are responsible for running and managing the company and taking key business decisions and shareholders donít have any direct control over the company and therefore they are not much aware of whats happening in the company.

Long Closing Proceedings:It is generally not easy to close the company as compared to other forms of business, the procedure to close is long and involves compliance of various formalities, at times it takes 1-2 years to completely wind-up the company. Moreover in certain cases, it is necessary to take the permission of the High Court to close the Company


Directors Identification Number(DIN)-

As per section 153 of the Companies Act 2013, every person who proposes to be the Director of a company shall mandatorily have an 8 digit unique code i.e. Director Identification Number (DIN) registered in his name.

DIN once allotted is valid for a lifetime


Digital Signatures Certificates (DSC)+

As MCA is a digital platform to file various forms and other related documents, thus there is a need to sign such forms digitally.

Thus any person/director who is so authorised to sign forms on or behalf of the company shall have his Digital Signature Certificate.

Directors+

Director is the person who controls and manages the day to day affair of a company, who acts both as an agent and trustee for a company.
Number of Directors in a company shall be

Minimum 2 and Maximum 15 in case of Private Limited Company

Minimum 3 and Maximum 15 in case of Public Limited Company, however companies after prior approval of Central Government can have more than 15 Directors.

Minimum 1 and maximum 15 in case of One Person Company (OPC).



Promoters/Shareholders+

Promoter: Is the person who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise.

Shareholder: Is a person who subscribes to the shares of the company and participates in the profits of the company, also known as member of the company.

A private limited company can have a minimum of 2 and maximum of 200 member in a company.

A public limited company can have minimum 7 members but no limit has been prescribed upon the maximum number of members i.e. a public company can have unlimited number of members.



Company Name+

Name of the company is the most crucial and important aspect of Incorporation, as it will be the identity of the company. Thus in order to choose the name of the company one should seek the understated checklist.

Does while proposing name of the company

The name shall be unique

The name shall depict the nature of business activity

Doníts while proposing name of the company

Shall not be similar to that of name already registered.

Shall not be a registered trademark.

Shall not fall in the category of Emblems and Name (Prevention and Improper Use) Act, 1950.

In some cases the name so proposed needs prior approval of Stock Exchange Board of India (SEBI), Reserve Bank of India. Thus if proposed name falls under the given category then approval shall be obtained.

Registered Office+

The Registered Office of a company is that place which tends to be the official address of the company also where the company so proposes to work and receives formal notices from government departments, investors, banks, shareholders, general public or any other authority.

The Registered Office is required for understated purposes:

To convene all the shareholders and board meetings

The Jurisdiction of Registrar of Companies is based on the registered office of the company.

All the necessary books of accounts and government records are to be maintained at its registered office.

While selecting the place for registered office one should keep in mind:

Convenience of the Management

Convenience of the Administration

Stamp Duty* so imposed by the jurisdiction over the place of registered office.

* STAMP DUTY IS SUBJECTED TO THE JURISDICTION WHERE THE REGISTERED OFFICE OF THE COMPANY FALLS

Memorandum & Articles of Association+

Memorandum of Association

Memorandum of Association is that document of a company which lays down the foundation of the company onto which the company constructs its structure. It has been divided into Six major clauses.

Name Clause: States the name of the company.

State/ Situation Clause: States the registered office of the company.

Object Clause: Describes the objects/ Business activity of the company and are divided into

Main Objects

Ancillary Objects

Other Objects

Liability Clause: States the nature of liability of the members of the company i.e. limited or unlimited.

Subscription: Details of the subscribers to the memorandum of associations of the company

Capital: Whether or not company is having share capital.


Articles of Association

The AOA of the company defines its bye laws which helps to regulate the internal affairs and code of conduct of its business.

It defines;

Duties

Rights and Powers of governing body

Directors Remuneration

Procedure of Transfer and Transmission of shares

Power of the Board of Directors of the company.

Share Capital

The Share Capital of a company is basically divided into three categories

Authorised

Issued

Subscribed

Authorised Capital: There is no limit onto the maximum amount of authorised capital but should not be less than.

Public Companies - Rs. 5 lakh

Private Companies - Rs.1 Lakh

One Person Company - Rs. 1 Lakh

as per the companies act 2013.

Paid Up Capital: Paid up capital is that part of Authorised Capital which has been allotted to the shareholder.

The paid up capital shall not exceed the maximum amount so mentioned below.

Public Companies - Rs. 5 lakh

Private Companies - Rs.1 Lakh

One Person Company - Rs. 1 Lakh



Company whether Indian or foreign is liable to taxation, under the Income Tax Act, 1961.

A Company means

Any Indian company, or

Any corporate body, incorporated by or under the laws of a country outside India


Classification of companies for the purpose of taxation

Domestic Company

It means an Indian company (i.e. a company formed and registered under the Companies Act, 1956) or any other company which, in respect of its income liable to tax, under the Income Tax Act, has made the prescribed arrangement for declaration and payments within India, of the dividends payable out of such income. A domestic company may be a public company or a private company.

Foreign Company



It means a company whose control and management are situated wholly outside India, and which has not made the prescribed arrangements for declaration and payment of dividends within India.

Provision relating to taxation of a Company

Indian companies are taxable in India on their worldwide income, irrespective of its source and origin.

Foreign companies are taxed only on income which arises from operations carried out in India or, in certain cases, on income which is deemed to have arisen in India. It includes royalty, fees for technical services, interest, gains from sale of capital assets situated in India (including gains from sale of shares in an Indian company) and dividends from Indian companies.

A Company is said to be resident in India during any relevant previous year if:-

i. It is an Indian Company; or
ii. The control and management of its affairs is situated wholly in India.


Tax Rates

Domestic Company

Income-tax: 30% of total income.
Surcharge: 5% of such income tax provided that the total income exceeds Rs. 1 crore
Education Cess: 3% of the total of Income-tax and Surcharge.

Company other than a Domestic Company

Income-tax: 50% and 40%
Surcharge: 2% of such income tax provided that the total income exceeds Rs. 1 crore.
Education Cess: 3% of the total of Income-tax and Surcharge.

Dividend Distribution Tax (DDT)

Under the Income Tax Act, any amount declared, distributed or paid by a domestic company by way of dividend shall be chargeable to dividend tax. Tax on distributed profit is in addition to income tax chargeable in respect of total income. It is applicable whether the dividend is interim or otherwise.

Dividend Distribution Tax: 15%
Surcharge: 5%
Education Cess: 3%


Tax Computation


The tax liability of the Company on its taxable income is computed in the following manner:

Ascertain the 'total income' of the company by aggregating incomes falling under following four heads:-

Income from House Property, whether residential or commercial, let-out or self-occupied. However, house property used for purpose of company's business does not fall under this head.

Profits and Gains of Business or Profession.

Capital Gains.

Income from other sources including interest on securities, winnings from lotteries, races, puzzles, etc. Also, income of other persons may be included in the income of the company. But, income under the head 'Salary' is not included under company.

To the total income so obtained, 'current and brought forward losses' should be adjusted for set off in subsequent assessment years to arrive at the gross total Income. The total income so computed is the 'gross total income'.

From the gross total income, prescribed 'deductions' under Chapter VI A of the Income Tax Act 1961 shall be made to get the 'net income'. Generally, all expenses incurred for business purposes are deductible from taxable income, given that the expenses must be wholly and exclusively incurred for business purposes and also that the expenses must be incurred/paid during the previous year and supported by relevant papers and records. But expenses of personal or of capital nature are not deductible. Capital expenditure are deductible only through depreciation or as the basis of property in determining capital gains/losses. But no deduction shall be allowed in respect of any expenditure incurred in relation to income which does not form part of total income.

Tax liability is computed on the 'net income' that is chargeable to tax. It is done either on accrual basis or on receipt basis (whichever is earlier). However if an income is taxed on accrual basis, it shall not be taxed on receipt basis.

From the tax so computed, tax rebates or tax credit are deducted.


Expand All

General+

What is the maximum number of members in case of Private Company?
What are the advantages to form a Private Limited Company?
What are the disadvantages in a Private Limited Company?
What is a Public Limited Company?
What is the maximum number of members in case of Public Company?
What is Company with Limited Liability?
What is Company with unlimited liability?
Which type of Company is generally suitable for business
What are the advantages to form a Public Limited Company in India?
What are the disadvantages in forming a Public Limited Company?
What is the difference between authorized capital and paid up capital?
What is Memorandum of Association?
What is Articles of Association?
Who are the subscribers to Memorandum of Association?
Whether any premises is required to start a Company?
Where any proof is required to be submitted with the authorities for registered office address?
What are the various types of business organizations that can form in India?
What are the various types of Companies in India?
What is a Private Limited Company?

Incorporation+

What are the registration requirements for a person to become a Director?
What is Director Identification Number (DIN)?
Which documents are required to get DIN in India?
How much time does it take for allotment of DIN?
What is the statutory fee for formation of Company?
What is the expected time that is required to Incorporate Company in India?
What is the procedure of incorporating a Company?
Do I need to visit the authority personally for registration of the company?
Is there any restriction on the name of the Company or I can avail any name as per my Preferences?
Can Company change its name?
When can a Company start its business?
Can I incorporate a Company with diversified objects?
What are the basic requirements for formation of a Company?
What is the difference between shareholders and Directors?
Can the Shareholder and Director be the same person?

Management+

Who manages the Company, Directors or Shareholders?
Who elects the Directors in a Company?
What are duties of Directors towards the Shareholders?
Whether Directors can be removed?
How business decisions are made in the Company?
Whether permission of shareholders is required for making certain decisions?
What are basic rights of shareholders?
Can Shareholders inspect books of accounts?
Can shareholders raise questions with the Board of Directors?
Is there any mandatory requirement for Board Meetings?
Can Board Meeting be conducted through Video Conferencing?.

Compliances+

What are the general Compliances for a Company?
Is there any difference in the Compliances of a Private Company or Public Company?
Is it mandatory to get the accounts audited by LLP?
What is time line for filing of Annual Accounts and Annual Return with the Registrar of Companies?
What is the time line for filing ITR with the Income Tax Department?
Is there any Compliance in respect of Board of Directors meeting?
Is there any Shareholders Meeting Requirement under the Companies Act 1956?
What is the requirement for maintenance of Books of accounts of Company?
What is the tax rate for Corporate Entity?
Is there any difference in Taxation from the prospective of Public Company or Private Company?
What are the basic tax numbers that are generally required to for every business?
What are tax numbers that are based on the nature of the business?
What types of statutory registers are required to be maintained by a Company?

Foreign Residents+

Whether Foreign Resident/Company can form Company in India?
Whether approval of Government of India is required before making Foreign Investment in India?
What are the sectors, in which Foreign Investment is prohibited?
Which agency decides the Foreign Investment Policy of India?
Please provide the list of agencies that helps in facilitating foreign investment in India?
What are options available for Foreign Company interested in establishing a business in India?
Whether any approval is required for entering into Joint Venture with Indian party?
What are the options available with a Foreign Individual for Business Set up in India?
Whether physical presence is necessary for setting up a Company in India?
Whether there is residency requirement for establishing business in the form of Company in India?
Whether it is necessary to have an Indian Director in the Company?
What type of visa will be required for transacting business in India?
Is there any mandatory requirement for establishing registered office in India?
What are various types of accounts that NRI can open in India?
I am a foreign company, which type of company should I incorporate in India?
Who is treated as Non Resident India?

Closure of Business+

What is the procedure for closure of Company?
What is the procedure for declaration of Company as Defunct?
How much time is required for Strike off name under Fast Track Exit Mode Scheme?
What are the rights available with the Creditors In Case Of Strike Off Company?
What are the modes available for winding up of Company?
What are the conditions where Company may be wound up Voluntary?
What are the conditions where a Company may be wound up by Court?
What is the procedure for winding up of Company?
How much time is required in winding up Process?


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