How to Register a Company in India – Detailed Guide

Want to start something of your own? Not sure what’s the right way to go about it? Here’s how to register a company in India.

From the initial planning of what you want to market and sell, to the business model – when you initiate the process of starting up, there are many aspects that one needs to take care of. One such important detail that should be prioritised is the registration of your company.

Registering a business or a company used to be a tedious process in India not many years ago. It would demotivate and overwhelm an entrepreneur as the process was complicated, costly, and included exhaustive procedures – quite a bit of running around in short. Making matters worse, was the lack of guidance and clarity on the various legalities and regulations involved.

But it is a whole new scenario today. The new policies and schemes enable an entrepreneur to register his/ her business from the comfort of home! The registration process has been simplified to a great extent.

An article put out by etnownews.com, reported that 1,38,051 new companies were registered in the previous financial year i.e from April 2020 to February 2021. This number is a great testament to the fact that registering your company in India is not as difficult today.

But what is the purpose of registering a company you may ask?

Registering your company comes with plenty of benefits that can take your business to the next level –

• It gives your business credibility and builds a reputation with customers and other stakeholders
• It helps in establishing a business bank account, which is further helpful in managing expenses
• It comes with certain tax benefits
• It allows owners to protect their business assets
• It makes you eligible to freely market and receive supplier benefits
• It helps in transactions with other big corporations

How to Register a Company in India

Before you look to register your company, there are certain key forethoughts to consider:

1. Choose the Right Company Name

This is an important and one of the first steps of starting up. Choosing a name and domain could have an impact on findability, searchability, and even building a recall. By registering your company under a certain name, you also agree to be a part of the Indian official company records under the Ministry of Corporate Affairs.

On registration, you get a company identity card with the company name to which your company bank accounts are linked. Your company name is also something your audience and customers will identify with. Therefore, it is of utmost importance to decide on a name that is not only legally viable but also well-aligned and unique to make your business stand out.

2. Choose a Suitable Company Structure

Another crucial aspect of registering your company is deciding upon the right company structure. A company structure, in simple terms, is how your organization is set up in legal terms. In India, there are 5 company structures to choose from, each having its own legal implications.

1. Sole Proprietorship
2. One-person Company
3. Partnership Company
4. Limited Liability Company
5. Private Limited Company

During the process of registering your company, you will be asked to register as one of the above. So, it is important to study these structures, their benefits, and limitations, as well as re-evaluate your planned business goals and objectives and see which one suits your business the most.

Tip – Read the Companies Act, 2013 to understand the subtypes, liabilities, and nit-bits of each company type.

The next step is applying for the initial documents that are necessary before incorporating your company.

3. Create an account on the Ministry of Corporate Affairs (MCA) website

The first step would be to create an account on the official MCA website. This will then be followed by the next two steps which are necessary procedures before incorporating your company.

4. Acquire a Digital Signature Certificate (DSC)

After creating an account on the MCA website, the next most important step is to apply for a Digital Signature Certificate. The DSC is an e-signature or digital key that becomes your company identity throughout the registration procedure and thereafter. This key validates and authenticates your submission of documents electronically.

When you log in to the MCA website and the services section, you will find the option to apply for a DSC. You will be asked to fill an online form and attach attested documents like your photo id proof and your address proof. Once submitted it should take about 2 days to get your very own DSC.

5. Obtain a Director Identification Number (DIN)

It is mandatory for the director(s) of a company to each have a valid Director Identification Number. This unique number, just like the DSC, is required when registering your company and helping when filling in further business-related e-forms. DSC focuses on the identity and validity of the business as a whole, and DIN centres around the proposed directors of the company.

You can apply for a DIN over on the Ministry of Corporate Affairs website. You will have to fill in an online form called the DIR-3 form which will require you to list and mention the proposed directors of the company. The documents required will be the photo ID and address proof of each of the applicants.

6. Secure your Company Name with the Registrar of Companies (ROC)

The next step is to secure your company name. You will have to fill in a form called the INC-29 which requests you to mention and confirm the name of your company and it will then check whether the name is under legal terms.

This step is important once you have registered on the MCA. The name is officially recorded and if you are then looking to change the name, you can only change after a period of 3 years.

7. Apply for the Company to be Registered

Once you receive the DSC, DIN, and name certificate, you are set to proceed with the incorporation procedure. You will have to get the above-mentioned documents stamped and attested at an authorised bank and then present them to the Registrar of Companies to get the certificate of incorporation. The process after submission takes about a week before you receive the sealed incorporation certificate.

8. Obtain PAN and TAN

The incorporation certificate makes it easier to obtain the next two important identities viz. Permanent Account number (PAN) and Tax Deduction and Collection Account Number (TAN).

PAN is the key that is required to open a company bank account and make various financial transactions. While TAN is compulsorily required for companies dealing with taxation. TAN is mandated by banks to process returns.

PAN can be applied by visiting authorised agents who are appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd. While TAN and also the Service Tax certificate can be acquired online through the TIN-NSDL website or by visiting your respective state’s Income Tax Department and filling the 49B form.

9. Register for VAT

Almost all of the states in India require a Value Added Tax (VAT) registration for companies that sell products. You can get a VAT certificate by visiting the Sales Tax Officer of the ward in which your company is located.

If you are registering as a Micro, Small & Medium Enterprise (MSME), then creating an account on the government’s Udyog Aadhaar website can help you navigate through this rather long process, a lot more easily. But your business must fall under their criteria for MSME.

You can check more about all the related requirements here.

The above-mentioned procedure is just the mandatory steps needed to register your company. There are many more useful certificates that you can get your hands on like the GST registration or an NOC from the Pollution Control Board that can boost your company’s credibility and integrity. But overall, this is what you will need and require when looking to register your company in India.

Before concluding, here is a summary of the list of documents needed to complete your registration process –

• Digital Signature Certificate (DSC)
• Director Identification Number (DIN) of all the proposed directors
• Original copy of the letter issued by RoC regarding availability of the name
• Form 1 – Incorporation of the company
• Form 18 – Address of the proposed company
• Form 32 – List of proposed directors and managers.
• Permanent Account Number (PAN)
• TAN and Service Tax Registration Certificate
• Value Added Tax certificate

Conclusion

The procedure of registration can be seemingly tedious and will require you to invest some capital. But in the end, it is what secures your reputation as a legal business entity. Today there are multiple third party agencies like Cleartax and Vakilsearch who help you with the registration process – end to end at an additional charge. But it is all worth the time, effort, and the resources.