An artificial person with a separate entity, perpetual succession, and common seal brought to existence by the law is a COMPANY.
However, generally people use the term 'COMPANY' for any group of people or and business, which is technically and legally not correct, herewith, we are explaining the classification of business entities:
In India, a business can be classified into five broad groups, as:
A single individual owning the business and benefiting from its profits is a Sole Proprietorship Company. An entity in this format generally takes 15 days to be functional and requires some basic statutory registrations.
This company formation involves two or more individuals with a maximum limit of twenty, bringing their ideologies to create a business structure in accordance with the terms and objectives mentioned in the partnership deed. The registration must be done either during the initiation of the company or during the course of the Firm's action.
A partnership firm works on the terms mentioned in the partnership deed. Governed by the Indian Partnership Act, 2003, a Partnership firm can opt for registration and get a registration number.
One Person Company is an enhancement over Sole Proprietorship Entity, which gives the only founder absolute control and benefit of limited liability. So in other words, a One Person Company is also a Limited Liability Company (LLC). One Person Company needs to get registered with Registrar of Companies (RoC) under Ministry of Corporate Affairs (MCA).
Limited Liability Partnership (LLP) is formed with few privileges over Partnership Firm. In an LLP, the liabilities of the partners are limited and protected from their fellow partners' debts and actions. The partnership deed plays a vital role in the working of an LLP, drafted by the partners and filed with the Registrar of Companies.
A Company owned by shareholders, but managed by directors is a Private Limited Company. Limited liability is provided to its members, as the identity of the company stands differentiated to the identity of its directors and shareholders.
Another noted feature of a Private Limited Company is, the shares of this company cannot be offered to the public.
In legal terms, Public Limited Company is similar to Private Limited Company, except that the minimum number of shareholders is 7 in public limited company, whereas it is 2 in a Private limited company.
Further, a Public limited company can offer its share to the public.
The registration of any company is a process undertaken by the Registrar of Companies (RoC), an office under the Indian Ministry of Corporate Affairs. Abiding by the rules of Companies Act, 1956 and Companies Act, 2013, RoC administers these companies.
22 Registrar of Companies' offices currently operates in all major states of India.
Although the registration of all the companies stands to be similar, yet each kind of company demands certain prerequisites. Payment of taxes like GST, Professional Tax, Shops, and Establishments Registration will verify and certify the existence of a Sole Proprietorship Company.
Whereas, a mandatory requirement of minimum two people is a must while forming a Private Limited Company, Limited Liability Partnership, and Partnership Company.
The new norms of the RoC require you to file all the documents via RoC website for online registration of companies.
If you're looking for help with Forming & Registering Company or other Business Entity, contact us today!