Different Types Of Companies In India: A Broad overview

The foremost thing to deal with while beginning your own business is fulfilling the legalities. It is done to assure the smooth operating of your business entity. 

In India, Pvt Ltd Company registration is the first step in the method. It grants you legal authorization to manage the business. It includes abiding by a set of rules and regulations prescribed below the Companies Act.

Company registration is a primary procedure that all business owners need to finish. The Companies Act 2013 lists various types of companies that can be incorporated in India.

Let’s take a peek at these various types of companies types in India.

1) Private Limited Company

Many people are confused regarding the question, What is private limited company registration? 

A Private Limited Company registration is a company registration by a private entity meant for small businesses. As per the terms of the Companies Act 2013, there can be 2 – 200 members in a company. 

In this kind of company, there are a group of shareholders. The total capital is made up of shares kept by each member. In a Company registration Pvt ltd, the liability of members is restricted to the number of shares kept by them.

 Business assets and personal assets are reviewed separately. Shares of a Private Limited Company can be traded or given to individuals, who in turn become owners of the company. The shares, though, cannot be publicly sold. 

A Private Limited Company can be further categorized as:

a) Company Limited By Shares

This is the most general form of a Private Limited Company. Here the liability of members is restricted by the memorandum to the price. If any, unpaid on the shares each held by them.

b) Company Limited By Guarantee

In this kind of Pvt Ltd Registration, the liability of the members is restricted by the memorandum. The members may each contribute to the assets of the company, in this case, it’s going bankrupt.

c) Unlimited Company

In this kind of company, there is no limit on the liability of the members. This indicates that in an event of a loss if the company assets fall low to pay off the lenders. The private asset of its members is then used to clear debts. The risk factor is very high here.

2) Public Limited Company

A Public Limited Company shares can be acquired by the general public. The company must have 3 directors and at least 7 shareholders. In a Public Limited Company, there is no limit on the number of shares.

The shares are recorded on the stock exchange and can be sold freely. Such companies are controlled by their shareholders. Companies below this category need a certificate from the Registrar of Companies (ROC) before beginning their business operations.

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3) Partnership

A partnership is “the relation between persons who have consented to share the profits of the business conducted on by them”. 

A Partnership Firm in India is a kind of Joint-Venture Company. The owners are individually known as partners and collectively identified as a firm. 

A minimum of two people is needed to start a partnership business. The highest number of partners is ten. 

The partners have unrestricted liability and can share profits in any jointly agreed ratio. The partnership firm registration is not mandatory.

Company formation and registration is, therefore, a significant and crucial step in realizing your goal of becoming a successful entrepreneur.

This is one of the various types of companies where business activities and operations are controlled by partners. The responsibilities, roles, and the number of shares kept by the two individuals are clearly described in the legal partnership agreement. The profits or loss acquired by the business is shared among the partners as declared in the agreement.

4) One Person Company

One Person Company (OPC) registration is the latest entrant in the various types of companies registered in India. It was included under the Companies Act 2013, to support entrepreneurs who hold the capability to operate a business singlehandedly. The least paid-up capital of shares in an OPC is INR 1 Lakh.

This new addition to the various types of companies in India was a delightful change. It provided a single person to work as a member of any company.

It is highly useful for owners of small businesses who do not require partners. Much in a similar approach, OPC is considered as a distinct legal entity from its members. The shareholders here have limited liability security and this kind of company is quite easy to incorporate.

5) Sole Proprietorship

Sole Proprietorship registration is a kind of company registration wherein a particular person runs the entire business operation. The business and the owner are interpreted as one identity and he/she solely sustains the profit or loss made thereafter.

The company in Proprietorship is listed in the name of a single person only. All accounting is done below the owner’s account for taxation schemes. Proprietors here have to handle unlimited business liability.

6) Limited Liability Partnership

A Limited Liability Structured Company (LLP) needs a minimum of two partners. It is also a newly started corporate business formation that conjoins two terms ‘company’ and ‘Partnership Firm’.

 An LLP is a separate legal entity from the partnership and personal and business assets are identified. If you want to register trademark online India and need help, you can rely on our local consultants for support.

The liability of the partners is defined by the amount of their share capital. When compared to Sole Proprietorship and Partnership, an LLP confers better credibility among its investors. This is connected to the appropriate maintenance of financial records, incorporation records, and tax records.

7) Section 8 Company

This kind of company registration is as a Non-Profit Organization (NPO). The purpose of an NPO is essentially to promote arts, commerce, and different forms of social welfare. Any profits, if made, here are used in accomplishing its aforesaid objective. The dividends are also not given to its members.

In India, no business registration can be used as a company if it is not registered with the registrar of companies. It is just after registration that a corporation becomes a separate legal entity from its members.

Use the information here, Get the company name registration done, and get started!