If you are planning to start a business, there are many business structures from which you can choose. The organisational structure you choose will determine the taxes you have to pay, the compliance measures you need to follow and the eligibility criteria you need to meet. Hence, one of the most vital decisions an entrepreneur can make is deciding what are the types of company registration to do in India.
As per the Companies Act of 2013, here’s a look at the different classifications and types of business entities found in India:
| Sl No | Criteria | Types of Companies |
| 1 | Basis of size | Micro CompaniesSmall companies Medium companies |
| 2 | Basis of the number of members | One person company Private companiesPublic companies |
| 3 | Basis of control | Holding companies Subsidiary companies Associate companies |
| 4 | Basis of liability | Limited by Shares or by Guarantee Unlimited |
| 5 | Basis of access to capital | Listed companies Un-listed companies |
Company registration is the primary process by which business owners establish or incorporate their company. Since there are several types of companies in India, entrepreneurs have to ensure they choose a business type that suits their operations. In India, the Companies Act, 2013 provides 7 different structures to set up a business:
Private limited companies are suitable for businesses that require registration as private entities. In this type of company, a group of shareholders distribute the liability amongst themselves to help protect their personal assets. The total capital of such business types is the total of all the shares held by each member of the company. Also, the personal and business assets of the members are considered separate, allowing for better protection and security. The shares of such a company cannot be publicly traded or transferred.
As per the Companies Act, to be eligible for this type of business registration, the following criteria must be met:
With Vakilsearch, you can get your private limited company registered easily.
A public limited company is one whose shares may be purchased by members of the general public. In such business entities, there is no limit on the number of shares that can be sold or traded. Since the shares of the company are listed on the stock exchange, they can be traded freely, making the shareholders part-owners of the company. Such companies need to obtain a certificate of registration from the RoC before commencing business operations.
As per the Companies Act of 2013, the following criteria must be met to register as a public limited company:
In partnerships, the handling of operations is by partners who have agreed on the role and share in profits. The functions, duties, powers, and number of shares held are all clearly defined in a verbal contract known as the partnership deed. These businesses fall under the purview of the Indian Partnership Act of 1932.
Partnership firms can function with or without a license as long as they have a valid and registered partnership deed. However, most partnerships do register as it gives them additional rights and benefits. The eligibility criteria to form a partnership are:
Popularly called an LLP, the limited liability partnership is a new type of company in India. It enjoys a separate legal status, helping distinguish between personal and business assets, and granting the entrepreneurs limited liability protection. In LLPs, the liability of each partner depends on the number of share capital.
To set up an LLP, the following criteria must be met:
The newest entry into the different types of company registration allowed in India is OPC and it is great for small businesses. It is the best option for entrepreneurs who wish to run a business by themselves. The OPC has a separate legal status; entrepreneurs get the benefit of liability protection without having to partner with anyone else.
Since it involves only one individual, an OPC is easy to incorporate and regulate. It essentially serves as a combination of the sole proprietorship and private limited company model of business entities. To register as an OPC, the following criteria must be fulfilled:
A sole proprietorship is where a single individual handles the running of the business. The company and the owner are considered as a single entity, making them solely responsible for profits and losses. Since the registration bears the name of the owners, tax filings and accounting reports will also bear the name of the owner, leading to unlimited business liability.
That said, it is the simplest form of business to set up and run. Home business owners prefer this as it does not require much investment or compliances.
Commonly called a non-profit organisation, Section 8 companies work for charitable purposes. The purpose is in the lines of promoting arts, science, literature, education, caring for the needy, and protecting the environment. Moreover, all the profits generated by them are used to achieve these objectives, and the members do not take dividends for themselves.
To register a Section 8 company, you must meet the following criteria:
You can register any of these types easily with the help of Vakilsearch. Likewise, our experts will take care of the entire process and answer all your questions.
If you are planning to start a business, there are many business structures from which you can choose. The organisational structure you choose will determine
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