As we know, India is one of the fastest-growing economies globally because of new and thriving business opportunities for start-ups as well as for existing enterprises. Many new players seek ways to enter the Indian marketplace or expand their ventures to join the competitive Indian markets. Whether international or national, all the companies need to get themselves registered to ensure seamless business and fast growth under The Companies Act 2013. The Act not just governs every entity but also provides them with certain benefits and exemptions. Let’s read what the Companies Act offers you if you get your business registered in India.
Choosing a suitable business structure before company registration
In India, we can follow a business structure as per our choice and business purpose. As business founders or an entrepreneur, we must choose our legal entity structure wisely. It is not enough to get an innovative or prospective concept for making investments, rather you must provide a robust business foundation if you seek to last longer. Hence, choosing an appropriate business structure is always advised as it is very significant for business success. Below I have mentioned some of the important and most commonly used business structures in India:
- Public Limited Company
- Sole proprietorship
- Limited liability partnership
- Private limited company
What is the Company Registration Number in India?
The Company Registration in India is also known as the CRN number in India. It is the unique number you get from the Registrar of the Companies (ROC) and can be received in several states of India governed by The Minister of Corporate Affairs. The CRN number is used to get the basic knowledge about the registered firm and hence, is also called the Corporate Identification Number or CIN. It is basically a 21-digit unique alphanumeric code given to every registered company under the Companies Act 2013.
Reasons why you must register your company in India
One of the most significant advantages of becoming a corporation is the limitation of liability. You are ultimately responsible for all facets of your business as a sole proprietor or broker, including debts and losses. After you’ve registered your business, you can save your assets. The collapse of the market or some other event may cause sole traders and alliances to be thrown into jeopardy. As a result, in the event of a corporate loss, the company’s directors and shareholders of the company are not demeed liable soley.
Eases transactions with business bank accounts
One of the basic requirements of any form of business operating in India, whether it is a partnership firm or a sole proprietorship, is a bank account that serves as legal proof of existence to the world. When you open a business bank account for a private limited company in any state of India, you may be asked for the incorporation certificate along with the memorandum of association. However, in the case of a partnership company or sole proprietorship, such documents are not needed.
Ownership can be transferred easily
There may come a point when it is essential to exchange ownership interest, and in such cases, it becomes more difficult for unauthorized business enterprises. Only the ownership of assets can be relocated when a sole proprietorship is sold. Transferring shareholdings and business-related records is, on the other hand, simple for entities registered as a private limited company or LLP.
Registered companies get loans easily from banks
One of the important benefits of registration of a company is that it helps business owners obtain loans from banks for the smooth running of the business or in times of need. Corporate bank accounts have always proven to be clear evidence of company registration, hence, you can easily convince lenders or other investors to invest in your listed or registered company. Once your company is registered lawfully and enters the corporate world, it will help your company to develop its marker, attract potential investors and broaden the business further.
Lessens tax obligation
Personal income tax rates are higher than those for corporations and family enterprises. You are taxed as a self-employed person in the same way that an individual is. Companies and small business entities can get tax breaks for things like adverts, remodelling, analysis, and training. If you register your startup as a corporation, your tax liability will be lowered.
Helps in developing a brand
A licensed company is always treated with more respect than an unlicensed one. This means that registering and forming a company is far more than getting you a legal entity or lessening tax. It means you establish a secure and credible association with your associates and stakeholders. Moreover, staff or employees will get attracted to work with your company which can enhance talent acquisition.