The concept of one person company was introduced in India by the Companies Act, 2013. Ever since its introduction it has been deemed a revolutionary thought. It was an expert committee led by Dr. JJ Irani that recommended the said concept. For people looking to kick off their own businesses with a proper and organized structure the concept of One Person Company opens up some whole new opportunities. With such a company, as a young entrepreneur you will get all the benefits that are normally associated with a private limited company. This categorically implies that they will be able to access credits, business protection in a legal manner, bank loans, market, and enjoy limited liability as well.
Background of this business
As a concept, one person company registration may be a new one in India. However, it has been in existence – and also achieved a fair degree of success, it must be said – in the United Kingdom as well as several other countries across Europe. In fact, this form of business has been in existence for a significant period now. The concept itself has some special features that have been mentioned in the Sub Section 62, Section 2, The Companies Act 2013.
What is a One Person Company?
A One Person Company is basically a company that has only a single member. It also needs to be noted in this context, that for all legal intents and purposes such a company is defined in legal terminology as a private company. Normally, each and every law and provision that is applicable to a private company is applicable for one person company registration in India as well, until and unless anything else is mentioned in this regard. The Companies Act 2013 has however provided an exception to the concept.
Exception to One Person Company
As per this exception, only a natural-born Indian would be able to register a One Person Company in India. That person needs to be a resident of India as well. This means that the advantages of such a company can only be availed by Indians who were born in the country and are staying in it as well. Alongwith this, it needs to be mentioned that the upper limit for forming such a company has been limited to 5 for each individual. Now, you may want to know how such a company is formed.
How to form a One Person Company
Normally, these companies are incorporated as private limited companies that only have a member each. Such companies normally have restrictions on inviting the public for subscribing to the securities held by the said company. These companies have some salient features such as limitation by guarantee, and limitation by shares. In case such a company is limited by shares there are some more restrictions that will apply to the same. For example it should have a minimum paid-up capital of INR 1 lakh. There are also restrictions on the number of shares to be held by the company. You can look up the internet for answers to this question - How can I register an One Person Company (OPC)?
As a new or established business owner it is very important that you get proper return on each and every dollar that you have invested in the same. One of the many expenses that you have to make irrespective of your business status is registering the company. At the time when you are starting your business such an expense may not seem to be that necessary but such a thought may be absolutely wrong. There are several reasons for that as well. For starters, with company registration you will be in a much-better position with regards to protecting your assets.
Protection of assets
It is always your dream to start your business but in business there is always a chance that you could lose the very assets that are holding you up in the first place. This could affect your family as well. In case, your business fails you may have no option but sell those assets in order to cover your losses. Quite often when a business fails people are sued and there are various financial issues as well. However, with company registration in India your assets can never be affected by your liabilities. There are plenty other reasons as well for registering your business but this seems to be the most important of all.
Securing your product
When you think of it calmly enough this is another reason why one should register a company. It could be that you have invented a product that is groundbreaking to say the very least. It is also possible that your product right now is being sold to millions across the country and has the potential to be sold outside it as well. This also means that your business is heading to the level that you may have envisaged for it. However, what happens when one of your customers faces a serious issue thanks to your product.
In that case there is always a chance that you could have to recall all your products and that could be accompanied by lawsuits as well. Worst of all, this could happen within the space of a night itself. By the time, the dust settles you may have become bankrupt or you may have spent every last bit of your insurance as well as savings. This is why you should go for online company registration. There are some benefits of completing such processes as well.
Satisfying monetary requirement
In case you are looking for private equity it is very important that you are registered as a business. When your company is incorporated the investors will feel a sense of security about things and would be able to pump in money in your company as well. If you have a proper exit strategy in plan then you can be sure that investors would be further impressed as well and that would increase your chances of receiving better investment. Normally these exit strategies are mentioned in the documents of incorporation only. In fact, venture capitalists actually prefer to invest in such companies.
A lot of entrepreneurs in India want to form a private limited company. At the same time there are also some businessmen who wish to set up a limited liability partnership company. They are always curious regarding how both these types of business entities compare. It needs to be said in this context that both the entities have a number of features that are similar to each other and come in handy when it comes to running small and large businesses, but there are several areas where they differ significantly from each other.
The process of registration
Normally, the processes of registering both these kinds of companies are pretty similar with some differences in terms of forms and documents being filed for the process of incorporation. If you wish to incorporate a limited liability company you will need at least two shareholders. In case it is a private limited company you would not be allowed to have more than 50 shareholders. In case of a limited liability partnership you will need to get at least a couple of partners. However, there is no upper limit for the partners that can form such a company. Even a corporate body can become a member of a limited liability partnership as well.
You can always update your information regarding LLP Vs Pvt Ltd from the internet as well as any other trusted source that you may have. In the first step of incorporating a limited liability partnership you have to apply to get the designated partner identification number (DPIN) from the concerned authorities. This designated partner identification number will come in handy for the designated partners of the company thus formed. You also need to get a digital signature for one of the partners.
On the other hand, in order to form a private limited company you first need to decide the name of the company to be. After this, you should apply for the digital signatures as well as the designated partner identification number. This is important information pertaining to private limited company registration. It is in the second stage of incorporating a limited liability partnership that you decide the name of the company and get the same on the basis of availability. In the second stage in case of a private limited company you need to draft the memorandum and articles of association.
In the third stage of LLP registration you draft the limited liability partnership agreement for the company in question and then file the incorporation document. This comprises Forms 2, 3, and 4 that can be downloaded from lip.gov.in. After filling up the forms they need to be handed over to the Registrar of Companies. In case of a private limited company there are some different processes involved. You need to stamp, digitally sign, and e-file the memorandum and articles of association along with e-forms 1, 18, and 32. This needs to be done in accordance with the Companies Act, 1956 as well as other documents that are mentioned in the articles of association that you have provided to the Registrar. The final stage sees the procurement of the respective certificates of registration.
When you are starting out on a business there are plenty of things in your mind – there are lots of decisions that have to be taken. One of the most-important decisions that you will ever take as a businessman is the kind of legal structure that you want for your business. Before you take any decision as such do remember that whatever type of company you form it will have an impact on several areas of business. You might want to form a private limited company (Pvt Ltd) but do so with great thought.
How is business affected by legal structure of a company?
A lot of entrepreneurs want to set up a limited liability partnership company (LLP). First of all, the kind of company structure that you choose would determine the amount of paperwork that you have to do before you get it up and running, and afterwards as well. It will also determine the amount and kinds of taxes that you are asked to pay. The legal structure would also decide the extent of personal liability that you have to face as the owner of the business. It will also decide how well you are able to raise money for your business.
Which one is the best?
Anyone might tell you that a one person company (OPC) is the best option going around while others might give you other names. However, you need to keep in mind the simple fact that it all depends on the circumstances that the business owner finds himself in. It is always subjective and unique in that sense. It all depends on what you can do. Therefore, any assumption that one form of business is better than the other is always a wrong one. This is why decision to start a company needs to be taken with a lot of thought.
Taking it slow
Experts will always tell you to take your time before you form a public limited company or any other form of company for that matter. It is always better to get all the advice and suggestions that you can from business experts before you get started with your firm. Each and every business has its pros and cons and you need to know them before you take a decision as such. If you take a good look around you, you would come across businessmen who always wish they had formed some other type of company. It is important that you do not have the same experience as well.
Getting the information
You might want to form a partnership company or a sole proprietorship company. But before you take any step please go and get information. The people you read about in the previous paragraph are basically ones who chose to ignore this important truth of doing business – looking before you leap. There are plenty of sources from where you can get information. If you for some reason are unable to visit an expert you can always look up the internet and read up as much as you can on the different kinds of business entities as well as their positives and negatives.
The Companies Act, 2013 represents a significant shift in requirements compared to the Companies Act, 1956. From the 2014-15 financial year the Companies Act, 2013 will be followed. The new yearly forms are also expected to be prepared as per the new requirements that come into being as a result of the introduction of the new law. It can be said with a degree of certainty that the new compliance rules are absolutely different from how they were under the Companies Act, 1956. For example, a number of new clauses have been introduced in the segment named Director’s Report. Some of those areas may be mentioned as below:
Changes in annual return
As far as annual filing is concerned, there have been a few changes. Previously, the e-form named 20B was used in order to prepare the annual return under the previous system. A new form named MGT-7 has come into being now. Compared to the previous yearly return completed under Schedule V the new form is quite lengthy. There is a couple of provisions that are related to annual return. One of them is named signing and the other one is named certification.
Changes in financial statement
Earlier on, as part of the Companies Act, 1956 companies were supposed to prepare a balance sheet as well as a statement of profit and loss account as part of their annual reports. There have been some company annual filing changes in this case as well. The Companies Act, 2013 has also added a consolidated financial statement and a cash flow statement to the said mix. Only the one person companies (OPCs) and smaller companies have been exempted from the requirement pertaining to a cash flow statement.
Changes in secretarial standards
As of 1 July 2015 all companies would have to conduct their meetings in accordance to provisions that have been mentioned in the Secretarial Standards and Companies Act, 2013. It is expected that there would be some significant changes when it comes to annual return filing for company. In case of the one person companies the director will have to disclose details regarding any interest he may have in any other business entity. This will have to be done in the first meeting of the board of director.
More changes on the way
The directors of the one person companies will also need to submit new MBP-1 forms as and when his business interests differ from what he had furnished in the previous form of the same name. They would also need to submit disclosures of non-disqualification each and every financial year. The case of annual general meetings will perhaps not apply for the one person companies though since they have only one individual who is doing all the stuff. They will also need to file their annual returns within 60 days of entering their ordinary resolution in their minute books.
Starting a company can be one of the most rewarding and interesting things that someone may have done in his life. One of the most-important decisions that you as an entrepreneur can make is the kind of company that you wish to form. This is an important part of starting the journey. The kind of business entity that you choose could go a long way in determining what happens to your company in the long term. This is why it is always important that you discuss your business plan with someone – preferably a person who happens to be a professional in such matters. Ideally the type of company that you choose to go with should be one that supports your business vision. It is important that you know how to register a Pvt Ltd company.
Building a great team
With private limited company registration you can easily form a great team that takes your business to new heights. Anne M Mulcahy says that, and rightly so, employees are the best assets of a company. They give you the competitive edge that helps you perform much better than your rivals. As a business it is your responsibility to attract the best talent and retain them as well. You need to keep on encouraging them as well.
Encouraging the employees
You have to give your employees all the stimulus that you think they might need. After all, it is these employees that would look after important work such as private limited company registration. Mulcahy also says that you need to make them feel as if they are integral parts of the company where they are working. When they feel that are important cogs in the wheel they will work hard to make sure that the company is doing well. Without fail, every company that has succeeded has done so because of the fantastic teams that have worked for them.
The importance of teamwork
It is teamwork that can make sure that processes such as registration of private limited company get over without much problem. Gone are the days when a company would become successful because of a single person. As soon as you are able to set up good teams you will find success as a company and grow to the extent that you have envisaged for yourself. These days, people who are skilled and experienced in their respective domains are looking for much more than the fat paycheck.
What are the employees looking for?
You can get information on Pvt Ltd registration in Bangalore on the internet. This is the reason why the companies are offering several benefits in order to attract the best employees and retain them as well. They are looking at ways such as stock ownership, training sessions on a regular basis, and flexible timing and working arrangements. Among all the benefits on offer stock ownership seems to be the best one on offer. It is a lucrative proposition for people who are working in a company as well as ones who are looking to join the same. Stock ownership makes you feel important
Business ideas in Bangalore call for well-thought of plans and intelligent decisions. Small or big start-ups, all need sharp thinking, depending on the demand of the product and the supply chain management that is predominant in the city. Depending on the cost of living and other resources, plan your business ideas accordingly. Regulatory formalities requiring compliance with various labour and environment laws are time consuming and difficult in nature. Often, new and small firms are unaware of nuances of the issues and can be subjected to intrusive action by regulatory agencies. In order to make compliance for Startups/ new registered companies friendly and flexible, simplifications are required in the regulatory regime.
In order to commence operations, companies require registration with relevant regulatory authorities. Delays or lack of clarity in registration process may lead to delays in establishment and operations of Startups, thereby reducing the ability of the business to get bank loans, employ workers and generate incomes. Enabling registration process in an easy and timely manner can reduce this burden significantly. Once you have done that, you have to venture out into capital and business development. Company registration in Bangalore is simple; however, there are certain legal aspects of it, which need to be kept in mind.
While you can opt for online registration, you can also hire agencies which can help you company registration. It is recommended to opt for the latter as there are number of requirements when it concerns starting a company in Bengaluru. Therefore, professional agencies can help you in finding legal lawyers, chartered accountants, and company secretaries. These agencies also help in accounting, preparing legal documents, business connections, trademark, and advisory services. These services, actually, help in providing end-to-end solutions in life cycle of business venture.
There is no necessity of visiting the corporate office for registering a start-up or a new company. You can actually register it online, sitting in the comforts of your home. In fact, the registration also includes registration like Digital Signature Certificate (DSC), Director Identity Number (DIN) and filling up an e-form.
Before registering the company, the director should acquire an identification number, which can be done by filing an eForm DIN-1. The second step involves acquiring the digital signature certificate. In order to ensure the security and authenticity of documents filed electronically, a valid digital signature is submitted electronically. The signature should be acquired by only those agencies that are appointed by the controller of certification agencies. The signatures can be obtained from TCS, IDBRT, MTNL, SAFESCRYPT, NIC, nCODE Solutions etc.
The third step for business registration includes creating an account on MCA portal. This will enable you to pay the online fee. This is free of cost and all you have to do is click on the registration link.
The final and the most important step include incorporating the company name, registering the office address, notice for the appointment of the company directors, managers and secretary. The form will also include the take and pay for their qualification shares. For each of the above-mentioned sections, you have to apply in Form INC-1, E-SPIE 32, E-SPIE -33 & E-SPIE- 34.
Some of the other things that have to be kept in mind while registering a company include:
It is to be ensured that both Indian and foreign directors need to have valid Digital Signature Certificates from authorized agencies.
Starting a “startup” and running the business would bring up several challenges throughout. It is common to face failure at the beginning of any enterprise. As an entrepreneur, your tenure would be marked with initial hiccups and hit-n-miss opportunities. Legal matters are one of the leading junctures which an entrepreneur often overlooks, often leading to hassles later on. Besides giving shape to your startup, you need to keep yourself updated on legal steps, to ensure a smooth-sail into progress. Here are some of the points you should learn about:
Choosing the legal structure of the startup
Your future plans would depend heavily on the legal structure of your startup. It has an impact on the kind of investors you can accept, your tax liability, your personal legal liability, and so on. By selecting the wrong kind of structure you might end up with unlimited personal liability for debts incurred by your company .So, you need to keep various factors in consideration, which include: type of business, administration control, tax registration, management and ownership, funding, profit sharing, business regulatory and many more like this.
In India, business registrations and licenses are extremely important to operate a business lawfully in a territorial jurisdiction. It may include com VAT registration, PAN registration, TAN, service tax registration, etc. Unless it happens, the entrepreneurial venture could become a subject of scrutiny under government authorities. Also, shareholders need to be kept in mind as often frauds and breech in agreement often happen due to lack of shareholder’s agreement. It is of essentiality to have a shareholder’s agreement, even if the people in question are friends or family members
One of the common mistakes that startups commit is by not registering their trademarks. This can turn to be costly as to survive in a competitive market, organizations often end up stealing ideas and other entities. You must protect your intellectual rights, not only for yourself but also for the organization as a whole. Go for the trademark registration and bear the responsibilities of an owner.
Avoid loose language
In the rage of marketing, some people commit grave mistakes of promoting overblown or exaggerated advantages of their product or services, which has unprecedented negative outcomes. Fraudulent cases are rampant, with consumers being smart enough to take the organization to court. Therefore, you should not opt for a loose language while describing the products and services that are utterly false. A carefully thought campaign would benefit on the longer run.
The legal jurisdiction has brought forwards great deal of reformation, in context to employees and their rights. . Failing to adhere to employee laws in regards to vacations, sickness and disciplinary action can result in a court case. It’s of essentiality to keep yourself abreast about employee rights to prevent any nasty occurrences down the line. Cases of bullying and sexual harassment in workplace, often lead to the strictest punishment being awarded. The goodwill can only be maintained through satisfied employees.
Do not miss out the evidence
Legal issues crop up due to employee disagreements, client satisfaction and so on. By not keeping evidence, you are bound to be at the defeated end. The most positive thing in this instance is reverting to complaint with evidence, putting your case across. Every business related decision needs to be documented in writing. Contracts, emails, and even note-taking apps are aids for you to prove innocence. It is always preferable to have proof to strengthen your case.
Agreements with a third party
While you negotiate for a third-party agreement, you should also include a non-disclosure agreement, which protects your rights of intellectual property. It should highlight all the points of agreement in the case of a breach, dispute or termination occurs. At the end, you will have proper documentation that prevents any harm to your startup.
When you are looking to start your own business, one of the first things that you will need to arrange for is the trademark for your company or enterprise. Trademark registration is a crucial aspect of your business as it makes your brand an official identity. Your target customers are going to make important purchasing decisions based on your trademark and the reputation of your brand. Therefore it is necessary that you put special importance on registering your trademark from the beginning. Here are some reasons why registering trademark is important for your business.
Trademarks make a brand unique and distinct from other brands in the market
Your trademark makes your brand unique and different from others within the same industry. This makes your brand immediately recognizable and identifiable for your target customers. In today’s world where business firms face a lot of competition from their rivals, it always helps to stand out and grab the attention of your target customers easily. For a customer, a trademark makes it possible for them to immediately know the company they are dealing with and the quality of services or products that they are likely to get.
Trademarks function as important communication tools
Trademarks always serve as effective communication tools for a business organization. When it comes to your brand, the trademark can communicate specific emotional and intellectual messages and attributes regarding you, your organization and the products and services offered by your company. In short, it can shape up your company’s reputation and determine how your target customers think about your brand or business. The best thing about a trademark is that it does not even need to be a single word. You can also choose a specific design or logo that can be identified by all customers.
Trademarks are considered to be valuable assets
Your company’s trademark can grow in value over time. As you are able to grow your business reputation, your trademark will increase in its value. By having a proper trademark in place, you can actually expand your enterprise further over time. Eventually you can use your trademark to merge with another company should you want to enter a partnership.
Trademark makes it easier for companies to make the best use of digital marketing
When you are looking to promote your company through social media platforms or the search engine, you will need to make sure that your brand is immediately recognizable by your customers. Having a distinct trademark allows you to do just that. By having a trademark for your brand, you can promote it effectively to get higher traffic rate for your site or social media profiles which will certainly help you earn greater revenues.
Trademarks help in recruiting employees
When you are looking to hire new employees, it will be easier for you to find prospective candidates since they are already familiar with your trademark and brand. Every individual wants to work for a high profile company and your trademark will ensure them that their careers are in good hands.