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To Register Or Not To Register

Sabahet Amjad
February22/ 2018

With our youngsters bubbling with ideas and our economy welcoming entrepreneurship, India has become the new startup capital of the world. After globalization, we spent two decades creating empires for first world countries with the help of our technical expertise and research abilities.

Fortunately, with the dawn of new millennium, young India realized that we have always had the power to create and all we needed was a push.

As a result of this realization and with the support of the new policies of the Government,  approximately 800 new startups register every year in India now. But what about those that don’t?

Our country is still full of 20 somethings with groundbreaking ideas but without a roadmap. Many still work on a mythical great idea of working but without any documentation or registration. Due to lack of exposure to laws, many believe that registration is a cumbersome process that requires tons of paperwork and time. It is high time that our young guns get a proper idea of the options and the procedure that Indian law provides. Let us give you a brief introduction to the forms of registration available:


Sole Proprietorship Firm: Let’s start with the simplest structure. This business is meant for those who believe that registration is a complex process and are afraid of the regulations that follow. A sole proprietorship business is registered in the name of the individual and the business is not a separate legal entity. In simple words, you can register the fact that you have a business and can keep the books of accounts on your name. Even, the tax liability will be added in your personal return. You can register your residential address as your office address.  In return for all these advantages, you may be solely responsible for the losses as well, if any.


One Person Company: One person Company or OPC, as mostly known, is the biggest step Indian lawmakers have taken to ease the process of setting up formal business in India. Sole proprietorship, even though simple, comes with its own disadvantages. The access of the law to the personal assets in case of losses is something that everyone would like to avoid. The continuation of business in case of the death of proprietor is also not possible.
OPC has the advantage of getting a company registered with the benefits of a private limited company but with only one member. One can assign a nominee who would continue the business in case of the demise of the owner. As compared to other forms of structure, very few legal compliance is required; even an AGM is not compulsory. The biggest advantage is that it has limited liability for the director/owner’s personal assets. One can increase the number of director to 15 and even convert OPC into a private company.


Partnership: No business starts or runs on one brain. In layman language, a partnership can be formed when two people want to work together and are ready to be equally responsible and liable for the firms’ profits and losses. A partnership is an extended form of sole proprietorship where there’s more than one person involved. It comes with the same advantages and disadvantages.


Limited Liability Partnership: A Limited Liability Partnership or LLP is one where the firm is a separate legal entity from the partners, i.e., the partners have liability only up to their share in the partnership. LLP has become a quite famous as a business form. The only limitation an LLP may face would be in case of expansion. An LLP cannot go for an IPO. Thus, the partners may have to re-establish themselves as a different type of structure all over again with fresh formalities and paperwork.


Private Limited Company: A private limited company is the most sophisticated form of company. It might seem as complex but the advantages it offers in the long term are plenty. Due to latest amendments to the law, one can register a company without any capital. A private limited company can also have a foreign person as a director. One of the biggest advantages it offers is that it can go to market for raising funds. Incidentally, only a private limited company can be financed by a venture capitalist. A private limited company provides the credibility that your business deserves.


With the plethora of these choices, young entrepreneurs should not shy away from registering their idea and change the business map of the world.




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