Registering your company: A step-by-step guide
Having a successful idea for start-up is the first milestone achieved in the long road of success, but converting this idea into a business company is the next landmark to be made. There may be many queries that jump into your mind once you take the leap from a small localized venture to a company. We jump in to clear your mind.
Talking about companies, a company implies an association of persons for some common object or objects. It is a contractual entity created by the members. There are many forms of companies:
- Sole Proprietorship
- Partnership , including Limited Liability Partnerships called (LLP)
- Company – Public/Private
The steps and processes may vary for different forms, but they share many similar processes. The processes can also vary from state to state. However for an initial start-up the most common form is that of a private company, i.e. those that are either sole proprietorship or partnerships/LLPs. Let us discuss the steps you would need to take to register your company in India.
Even though Shakespeare said, “Whats there in a name?”, we say “EVERYTHING!”
The name of your company is your brand, the idea that people would associate with your products. So the first step in getting your company registered is the approval of a name for your Company. You can register online with the Registrar of Companies (ROC) (National), costing around Rs 200*. Usually it takes up to 5-7days.
To be on the safe side you are required to submit two alternative names, and the names and addresses of the members (a minimum of two for private companies) and Authorized Capital of the Company, a minimum of Rs 1 Lakh.
DIN – Directors Identification Number
Under the new requirements set forth by the government, Directors for an Indian company, both Indian and foreigners, must register and get an identification number. It is called a Director Identification Number (DIN). The application needs to be filed online from the Ministry of Corporate Affairs portal (National).This would cost around Rs 100-200* and the time taken would be around 1-2 days.
DSC – Digital Signature Certificate
The Directors of Indian companies are required to get a DSC. This is also applicable for any representatives who would sign ROC forms and documents. The DSC can be obtained by registering online from a private agency authorized by the Ministry of Corporate Affairs (National). The cost is around Rs 1500*.time taken would be around 3-4days.
The next step is to get the company documents stamped at the State Treasury or even an authorized private bank. The procedure takes 1-2 days. The cost is summed up as close to Rs 1300, which is divided as Rs200 for MOA+ Rs 1000 for AOA for every Rs 500000 of share capital or part thereof+ Rs 100 for stamp paper declaration (Form 1).
After that you are required to get the Certificate of Incorporation from the ROC (Registrar of Companies) and MCA (Ministry of Corporate Affairs). The time taken can go up to a week or more and the cost depends from company to company (may amount to Rs 15000).
To ensure the legality of important company documents a company is required to stamp it with its seal. The company makes its distinct company seal. This can do in a day.
PAN – Permanent Account Number
Next you would be required to get a PAN from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Union Trust of India (UTI) Investors Services Ltd. This can take up to a week and can cost Rs 60-70.
TAN – Tax Account Number
Obtain a TAN for your company for Income taxe deducted at source from an Assessing Office at your state*, Income tax department. Can take up to a week and cost around Rs 50-60.
After that register you company with the Office of Inspector, Shops and Establishment Act (State). It takes around 2-3 days and cost somewhere between Rs 6000-6500(Rs 20000+three times the registration fee for trade refuse charges).
VAT – Value Added Tax
On April 1, 2005, sales tax was replaced by the VAT, which requires registration by filing Form 101. Register for VAT at the Commercial Tax Office (state). The time taken for this procedure is 12 days and cost around Rs 5100.
Next is to register for Profession Tax at the Profession Tax Office (state). The time taken is 2-3 days and is free of cost.
Then you need to register at the Employee’s Provident Fund Organization (national). The documentation is completed in 12-14 days and is free of cost. Finally register for the medical insurance at the regional office of Employees state Insurance Cooperation. Time taken is 9-10 days and is free of cost.
Please note that the costs and days depend from state to state.
After following the above steps you will have fulfilled all the essential criteria for registering your company. Though it will take time and a taste for risk-taking to have the courage to move from one step to the next, your hard work will pay off. We are entrepreneurs, after all, and should remember that success comes to those who move on the path less traveled by.