Types of Companies in India – Types of Corporate Entities in India – Types of Legal Entities in India,
 The following types of business entities are available in india

 

Sole Proprietorship

      Sole Proprietorship Firm Registration is Single Person Firm Registration i.e. is the main objective is Open Current Bank Account on the Name of Business so it’s a simply firm which is enable doing business in India with Less Compliance and Less Costing.

For more information visit http://factorystartup.in or http://daltongroup.in  

 

Partnership


       A partnership firm is a form of business in which a group of people, also known as partners, come together. They set up their firm and provide services and products through it. However, a partnership firm is not considered to be a separate legal entity. Partners share all the profit and losses amongst each other

The following can enter into a partnership by law:

  • An Individual
  • A firm (which is recognized as a separate legal entity by law)
  • A company
  • A Trustee
  • The main member (Karta) of a Hindu Undivided Family

For more information visit http://factorystartup.in or http://daltongroup.in  

 

Limited Liability Partnership (LLP)

A law to allow Limited Liability Partnership (LLP) in India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP) Act of 2008).

LLP is an alternative corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm.

This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular, including professionals and knowledge based enterprises.

As proposed in the Bill, LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP.

Further, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner wrongful business decisions or misconduct.


For more information visit http://factorystartup.in or http://daltongroup.in  

 

Private Limited Company

A private company is a company which has the following characteristics:

  • shareholders right to transfer shares is restricted;
  • the number of shareholders is limited to 200; and
  • An invitation to the public to subscribe to any shares or debentures is prohibited.

A Private Limited Company is the most popular form of business entity used for Foreign Investors in India, including USA investors in India. There are various  requirements for forming a private limited company in India. There are various steps required to establish a business in India, before and after incorporation, as mentioned hereinafter.

For more information visit http://factorystartup.in or http://daltongroup.in 

Public Limited Company

A public company is defined as a company which is not a private company. The following conditions apply only to a public company:

  • It must have at least seven shareholders.
  • A public company is not authorized to start business upon the grant of the certificate of incorporation. In order to be eligible to commence business as a corporation, it must obtain another document called trading certificate.
  • It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.
  • A public company is required to have at least three directors.
  • It must hold statutory meetings and obtain government approval for the appointment of the management.

There are several other provisions contained in the Companies Act 1956 which are applicable only to public companies and should be consulted.

For more information visit http://factorystartup.in or http://daltongroup.in 

 Typical Procedure to Establish Business in India

In India establishing a business takes some time. Besides incorporation there are many other formalities in establishing a business in India. The following chart contains typical formalities including incorporating a private limited company in India

Nature of Procedure in India

Duration (days)

STEPS FOR COMPANY FORMATION IN INDIA
  • Obtain Director Identification Number DIN for proposed Directors of the new Company

1

  • Obtain Digital Signature Certificate DSC for proposed Directors of the Company

2

  • Filing the proposed name of company for approval to the Registrar of Companies (ROC)

2

  • Get the Memorandum of Association and Articles of Association printed

1

  • Pay stamp duties online

1

  • File all incorporation forms and documents online, including the Memorandum of Association and the Articles of Association.

2

  • Obtain the certificate of incorporation

2

  • Request and obtain Certificate to Commence Operation, if required

5

OTHER STEPS FOR SETTING UP BUSINESS IN INDIA
  • Obtain a company seal

3

  • Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI)

7

  • Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Income Tax Department

7

  • Register under Shops and Establishment Act

4

  • Register for value added tax (VAT) before the Sales Tax Officer of the ward in which the company is located

12

  • Register for Profession tax

2

  • Register with Employees’ Provident Fund Organization

12

  • Register with ESIC (medical insurance)

9

  • Filing for Government Approval before RBI/FIPB for Foreigners and NRI’s

15

Totals:

40

Advantages of Incorporating in India

  • Many tax exemptions available to the company set up in Special Economic Zone;
  • Many tax incentives available to IT companies;
  • India has got double taxation treaties with many countries;
  • Minimum authorized capital of only INR 100,000 is required to form a private company in India;
  • Skilled and intelligent employees available at nominal rate;
  • With its large base of English speaking skilled human resource, it is most sought after destination for business process outsourcing, Knowledge processing etc.

Applicable Laws for Forming a Company in India

The laws applicable for incorporating a company in India include the India Companies Act 2013, read with Companies (Central Governments’) General Rules and Forms, the Indian Income Tax Act, and other laws & regulations. The previous law was India Companies Act of 1956.

 The Foreign Exchange Management Act of 1999 is applicable for foreign investments and transactions.

New Companies Act 2013

The New Companies Act of 2013 has made major changes in the corporate laws of India. Among the major changes introduced by the new Act are the followings:

For all companies:
  1. Resident Director: Every Company must have a director who stayed in India for a total period of 182 days or more in previous calendar year.
  2. Company Letterheads, bills or other official communications must have the full name, address of its registered office, Corporate Identity Number (21 digit number allotted by Government), Telephone number, fax number, and Email id, website address if any.
  3. Accounting Year:  Every company shall follow uniform accounting / financial year i.e. 1st April -31st March. Those companies which follow a different financial year have to align their accounting year to 1st April to 31st March within 2 years.
  4. Articles of Association:  In the next General Meeting, it is desirable to adopt Table F as standard set of Articles of Association of the Company with relevant changes to suite the requirements of the company.
  5. Memorandum of Association:  Every copy of Memorandum of Association and Articles of Association issued to members should contain a copy of all resolutions / agreements that are required to be filed with the Registrar.
  6. Loans to Director:  The Company cannot advance any kind of loan / guarantee / security to any director, director of holding company, his partner, his relative, Firm in which he or his relative is partner, private limited in which he is director or member or any bodies corporate whose 25% or more of total voting power or board of directors is controlled by him.
  7. Disqualification of Director:  All existing directors must have Directors Identification Number (DIN)allotted by central government. Directors who already have DIN need not take any action. Directors not having DIN should initiate the process of getting DIN allotted to him and inform companies. The Company, in turn, has to inform registrar.
For Public Companies:
  1. Appointment of Statutory Auditors: Every Listed company can appoint an individual auditor for 5 years and a firm of auditors for 10 years. This period of 5 / 10 years commences from the date of their appointment. Therefore, those companies have reappointed their statutory auditors for more than 5 / 10 years; have to appoint another auditor in Annual General Meeting for year 2014.
  2. Woman Director: Every Listed Company /Public Company with paid up capital of Rs 100 Cores or more / Public Company with turnover of Rs 300 Cores or more shall have at least one Woman Director.

 

 

     Licenses and Registration Required for Hotel Business

      A number of licenses and registrations are required for starting and operating a hotel business in India. Many of the licenses and registrations must be obtained prior to starting the hotel and renewed while the hotel is operational.  Further, most licenses require the hotel to meet certain rules or criteria’s for maintaining validity.  Therefore, it is important for Entrepreneurs in the hotel industry to be aware of these licenses and registrations – to operate a hotel business smoothly.

A lot of the license requirements depend on the type of hotel, star rating, amenities and the location of the hotel. Further, the rules and regulations to obtain license for hotel industry differs according to the states.

For more information visit http://factorystartup.in or http://daltongroup.in  

Building Permit

The National Building Code of India was prepared by the Bureau of Indian Standards to unify the building regulations throughout the country.  The National Building Code is adopted by all Government Departments, Municipal Bodies and other Construction Agencies. As per the National Building Code, no person shall carry out any development, erect, re-erect or make alterations or demolish any building or cause the same to be done without first obtaining a separate permit for each such development/building from the Authority. Therefore, all hotels must have a proper building permit as per the relevant Town Planning Act or Development Act or Municipal Act or any other applicable statutes for layout, building plans, water supply, sewerage, drainage, electrification, etc,.

For more information visit http://factorystartup.in or http://daltongroup.in  

Fire Safety Permit

A fire safety certificate or permit is required for the Fire Department is a must for operating a hotel business. Fire safety certificate is usually provided if the building has incorporated proper fire prevention and fire safety measures as required under the relevant fire safety rules and regulations.

For more information visit http://factorystartup.in or http://daltongroup.in  

Police License for Hotel

Hotels are public places that are monitored closely by the Police Department. Therefore, all hotels must maintain proper log of all Guests who have stayed at the hotel, follow relevant regulations and maintain a valid permit from the Police Department. Police license for hotels usually falls under the power of licensing of Places of Public Entertainment held by Commissioner or Additional Commissioner of Police.

For more information visit http://factorystartup.in or http://daltongroup.in  

Trade License

A trade license is usually required from the local Health Department for restaurants and hotels. Health trade licenses are usually issued by the Municipal Corporation. The health trade license is required for businesses that have a direct impact on public health. Compliance with the relevant hygiene and safety norms, which are important for public health, is a prerequisite for issuance of a health trade license.

For more information visit http://factorystartup.in or http://daltongroup.in  

Business Registration

It is recommended that a hotel be setup under an artificial legal entity like company or LLP. By operating a company under an artificial legal entity, the liability of the promoters with respect to the business can be limited and the business as a going concern would be easily transferable to another person.

For more information visit http://factorystartup.in or http://daltongroup.in  

ESI Registration

ESI is an autonomous corporation under Ministry of Labor and Employment, Government of India. Employee’s State Insurance is mandatory in India for Businesses that employ 10 or more employees. 

For more information visit http://factorystartup.in or http://daltongroup.in  

PF Registration

A Employee Provident Fund (PF) Registration is required for any establishment that employs more than 20 persons in India. The PF Board administers a contributory provident fund, pension scheme and an insurance scheme for the workforce engaged in the organized sector in India.

For more information visit http://factorystartup.in or http://daltongroup.in  

Bar License

If the hotel operates a bar or serves alcohol in the restaurants, a Bar license will be required from the relevant authorities. Bar license is usually provided by departments operating under the State Government. Hence, the requirement for bar license varies from state to state.

For more information visit http://factorystartup.in or http://daltongroup.in  

FSSAI Food Business License

FSSAI food business license under the Food Safety and Standard Act is required for operating a restaurant in India. The FSSAI food business license is usually provided for one year and is renewal at the end of each year. FSSAI license for restaurants are managed by the local FSSAI office. FSSAI license for restaurants does not fall under the purview of the Central Government.

For more information visit http://factorystartup.in or http://daltongroup.in  

GST Registration

           The VAT and Service Tax regime ended with the introduction of GST on 1 July 2017. Every new business has to acquire GST registration in order to commence business activities for taxation purposes. Businesses with low turnovers can also avail the composition scheme in order to be free from intricate return compliances and rules under the GST regime.


For more information visit http://factorystartup.in or http://daltongroup.in