Benefits of registering a Company and prerequisite

If you are planning to start a business in India, you it is always advisable to register your company. However, if you work as a proprietorship concern or partnership firm, it is not mandatory to register your company. You can operate using your savings account in case of proprietorship concern but if the bank feels the necessity of converting your saving accounts to the current account, the bank will intimate you.

Although the government of India gives you the leverage of working without registration; the registration of company gives a lot of advantage over a non-registered entity .Here we have compiled a list of points which illustrates why it is important to register a company in India.

  1. To run a business of any nature, you need a bank account. For a small business like a proprietorship, you can have a savings account. Saving account has its own limit of the transaction, if you are making a substantial transaction in your saving account you may receive Notice from Income tax department.
  2. Registering a company and issuing Invoice with your company name is considered a good practice rather than Issuing Invoice in your personal name and making transactions in your saving account.
  3. You need legal certification to open payment gateway on your website. The entire e-commerce website needs this.
  4. All the industries and business prefer doing business with registered venture rather than with sole traders.
  5. Registration of business gives it a professional identity and hence is preferred by other companies as a credible and trustworthy business entity.
  6. In case you require funding for your business from Angel Investors or Venture Capital, they rely on registered entity instead of an unregistered entity.
  7. In the case of partnership firm partners of the registered firm can file a case in case of dispute with any of the partners, them, to enforce their rights.


Now, you must be having a clear idea on the reasons to register a company. So, the next step is registering the company. How to go about it? Here is a brief overview of what are the prerequisites of registering a company:

Decide the nature of the company:Once you have decided that you will start a company, you need to decide its nature. In India you can establish a company in either of the following formats:

  1. Private Limited Company
  2. Public Limited Company
  3. Limited Liability Company
  4. Sole Proprietorship
  5. Partnership Firm

Process of Registration of Private Limited / Public Limited Company.

To Register, a Private limited company minimum two people are required and to register a public limited company minimum Seven Person are required.

Documents Required:

  1. PAN number (Mandatory for Indian resident)
  2. Passport (Mandatory for Foreign resident)
  3. ID Prof- like Passport, Voter ID, Driving License, Aadhar Card etc.
  4. Address Proof - like Bank Statement, Electricity bill, Telephone bill, Mobile bill etc.

Digital Signature - The first step before starting to register a company is to get the Digital Signature Certificate. It is mandatory to get a digital signature for applying Director Identification number (DIN) for proposed directors of the company.

Director Identification number of the Company - Once you plan to register a company ,we need two Director for Private limited company and Three Director for public limited company. Every proposed Director need a unique identification number called Director Identification Number or DIN.

Name application for Reservation of Name - Once you have decided to register a company, it becomes mandatory to register the name. You need to check the availability of name on MCA website. An important point to note here is that the company name you want to register must be available with MCA. It must be unique and must not resemble with any existing name of the company. The name selection is a tedious task as it gives you only 6 options for name selection. It usually takes around 2-3 days for name registration.

Drafting of MOA and AOA - Once your company's name is approved by ROC you need to submit MoA and AoA and other necessary documents. Memorandum of Association (MoA) covers the fundamental provision of the company, whereas the Article of Association (AoA) covers the internal management of the company ie the rights and duties of the members of the company.

Submitting of Incorporation Documents - Post you have fulfilled all the prerequisites of company incorporation, its time to submit all the necessary documents for company incorporation. The following documents needs to be submitted for the process:

  1. E-Form INC-7, DIR-12 and INC-22 has to be submitted along with the following documents for incorporation of company:
  2. PAN Card of each promoter, In case of foreign Individual it has been made optional.
  3. Address proof - Voter ID, Aadhar Card, driving license,Passport
  4. Residential proof- Telephone bill, electricity bill, Bank Statement, Mobile Bill
  5. MOA and AOA
  6. Proof of Registered office of the Company
  7. Affidavits and Declarations

Getting Certificate of Incorporation - Once the documents are submitted and gets verified and approved by MCA, a CIN or Corporation Identity Number is generated and a Certificate of Incorporation is issued After registering the company, register its logo and other necessary details:

  1. It gives your business legal protection
  2. It gives your company a unique identity
  3. Registered trademark is a right that can be franchised or commercially contracted
  4. It creates IP or Intellectual Property
  5. It helps you earn trust and goodwill in the market

Registration with Sales Tax and Service Tax division- Now that you know the nature of your business you need to register with Sales tax division or service Tax division whichever is applicable to the nature of your business.

Disclaimer: Statements and opinions expressed in articles are those of the author's personal views.

About the author: Satyendra Kumar Mishra

Satyendra Kumar Mishra is the founder and CEO of which was founded with the singular objective of offerings the highest quality corporate and incorporation services to its clients all over the globe. Since its foundation, has helped entrepreneurs across India to incorporate their businesses in a fast and secure manner.

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