Some years back, starting a business in India required one to take care of loads of paperwork, visit multiple offices, follow up with various departments, and wait for weeks. Now, the situation has changed for the better with digitalisation from the MCA with the introduction of SPICe+ and AGILE PRO-S Forms.
In the present day, entrepreneurs can now register their companies online in as little as 7 days. These updates have enhanced the overall experience for company registration in India and are encouraging thousands of first-time entrepreneurs to legally incorporate.
The SPICe+ System: One Form, Many Approvals
SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a simplified web form created by the Ministry of Corporate Affairs as a single form for all new companies to access. Founders now need to submit this one application for the various approvals, like company name, PAN, TAN, GST, EPFO, and ESIC registration, rather than applying separately for each of these approvals. This integration alone saves weeks of running between departments and offices.
The typical journey looks like this:
- A company name is reserved either by using the RUN (Reserve Unique Name) service or directly in SPICe+.
- The Memorandum of Association (MoA) and the Articles of Association (AoA) are prepared by the team. These articles define the purpose and bylaws of the company.
- To electronically sign and file documents, directors have to get a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
- The application is submitted to the Registrar of Companies for consideration, and a Certificate of Incorporation (CoI) is issued if the Registrar is satisfied.
If you’re well prepared, this cycle can be wrapped up in under two weeks (7-15 days).
How to Identify the Right Structure Before You Register?
Primarily, a founder must choose the most suitable structure of the company while incorporating it. This choice can impact the amount of taxes the business is subject to, the nature of compliance required, and the capital that can be raised for years to come. Here’s how primary business structures differ from each other:
- A Private Limited Company is best suited for companies that wish to raise equity from investors or grow quickly. This way, founders can easily dilute the equity and often get more preference from banks and venture capital.
- A Limited Liability Partnership (LLP) will be suitable for any professional services firm (Consultant, Designer, Agency). These firms often need the limited liability protection of a company, but without the burden of compliance that comes with a Private Company.
- A One Person Company (OPC) is formed by one person, aka a solo founder. It offers a corporate structure and limited liability to the sole entrepreneur without requiring a co-founder.
When selecting the type of structure, founders should take into account the registration requirements and compliance timetables of each one.
Why Should Founders Always Register Early?
Early company online registration offers a business a unique legal identity, independent of its founders. The company can open a bank account in its name, sign contracts, lease office space, and hire employees. A registered company is also held in higher esteem by investors and lenders than an unregistered company.
Once a company exists on paper, founders often turn their attention to protecting the brand itself (its name, logo, or tagline) through the trademark registration online process. This process is filed in the IP India portal under the Trade Marks Act, 1999, and confers exclusive rights of the business to its brand identity for a period of 10 years.
The incorporation procedure handled appropriately is essential for a business to take off and develop, raise capital, and compete in the market confidently. All other aspects of brand protection can be built upon later.
