8/2/2019 Tarting a New Business is Not Rocket Science if One Keeps the Basic Lega

1/4

tarting a new business is not rocket science if one keeps the basic legal requirements in mind.The present article lists down the main legal formalities required to start a Company form of

business in India.

There are many forms in which a business can be organized. Usually, the following models are

popular:

y Sole Proprietorshipy Partnership ,including Limited Liability Partnerships called (LLP)y Company Public/Private

While there are certain processes that are common to any form of business organization, eachone of the above has certain peculiar requirements. This article analyzes the requirements for

starting a Company. These may vary from State to State and may change from time to time. Alsoa business may require additional (or not all of the below mentioned) registrations, compliance

and certifications.

Incorporating your company

Name approval

The first step in getting your company registered is the approval of name for the Company.Generally, it takes about seven days to get the approval. The following steps are required for

name approval:

You have to file an application in Form No. 1A with the Registrar ofCompanies (ROC) of theState in which the Registered Office of the Company is proposed to be situated. The application

is to be signed by one of the promoters and must contain the following details:

Minimum 2 alternative names for the proposedC

ompany. (The name can be coined names fromthe objects of the Company or the names of the directors, etc. but should definitely be indicativeof the main object of the Company. Justification for the name needs to be specified along with

the application).

Names and address of the members (minimum 7 for a public Company and 2 for a privateCompany).

Authorized Capital of the Company (Minimum Rs.5 Lac for a public Company and Rs. 1 lac for

a private Company).

M

ain objects of the CompanyOn submitting the application, the ROC scrutinizes the same and sends the approval/objectionsin about 10 days to the applicant.

Director Identification Number (DIN)

Directors for an Indian company, both Indian and foreigners, must register and get identificationnumber under the new requirements. It is called Director Identification Number (DIN). The

application needs to be filed online.

8/2/2019 Tarting a New Business is Not Rocket Science if One Keeps the Basic Lega

2/4

The form along with the supporting documents (PAN Card & Residence proof duly attested byCA, Notary or Gazette Officer) is to be sent to the offices designated by respective ROCs.

The fee for obtaining DIN can be deposited online or deposited in banks authorized for this

purpose.

Digital Signature Certificate (DSC)

Directors for an Indian company, both Indian and foreigners, are also required to get Digital

Signature Certificate (DSC). DSC is required for all Directors or authorized representatives ofany Company as well as the professionals who will sign ROC forms or documents.

Memorandum and Articles of Association (Memorandum and Articles respectively) While the Memorandum states the main, ancillary/subsidiary and other objects of the Company,

the Articles contain the rules and procedures for the routine conduct of the Company. TheMemorandum also states the authorized share capital of the Company and the names of its first

directors.

Memorandum and Articles also need to be stamped. The stamp duty depends on the authorizedshare capital.

Documents Required to be Filed with ROC

The following documents are required to be submitted to the ROC :

Memorandum and Articles - These are required to be executed by the promoters in their own

hand in the presence of a witness in quadruplicate stating their full name, fathers name,residential address, occupation, number of shares subscribed etc.

Form No. 1 - This is a declaration to be executed on a non-judicial Rs 20 stamp paper by one ofthe directors of the Company or other specified persons such as attorneys or advocates statingthat all the requirements of the incorporation have been complied with.

Form No. 18 - This is to be filed by one of the directors of the Company informing the ROC of

the registered office of the Company.

Form No. 29 - This is the consent obtained from all the proposed directors of the Company to

act as directors of the Company. (Not required in case of private Company).

Form No. 32 - This states the appointment of the proposed directors on the board of directors

from the date of incorporation of theC

ompany and is signed by one of the proposed directors.

Name approval letter in original.

Power of Attorney signed by all the subscribers to Memorandum authorizing one of thesubscribers or any other person to act on their behalf for the purpose of incorporation and

accepting the certificate of incorporation.

8/2/2019 Tarting a New Business is Not Rocket Science if One Keeps the Basic Lega

3/4

Power of Attorney in case of a subscriber who has appointed another person to sign theMemorandum on his behalf.

Applicable filing fees.

These documents need to be filed online first and then a physical copy should be submitted to theROC.

Certificate of Incorporation

After the above documents are filed, the ROC calls the attorney on a specified date for scrutinyand making corrections, if any in the Memorandum and Articles filed. On complying with the

same, the certificate of incorporation is sent by post to the registered office of the newlyregistered company.

Web resource : mca.gov.in

Income Tax related compliancePermanent Account Number (PAN)

After incorporation, the Company must obtain its PAN. For this purpose, an application needs to

be filed with the Income Tax Department in Form 49A with the necessary documents. PAN ismandatory for opening of Bank Account, filling of Income Tax returns and various other

financial transactions.

TaxDeduction Account Number (TAN)

After incorporation, the Company must also obtain a TAN. For this purpose, an applicationneeds to be filed with the Income Tax Department in Form 49B with necessary documents. TAN

is required for depositing of TDS/TCS.

Web resource: incometaxindia.gov.in

Other Tax compliance

Value AddedTax

VAT registration is required for a trading business. This is to be applied for to the local SalesTax Department in the prescribed forms along with specified fees and necessary documents. On

completion of the formalities, a Tax Identification Number (TIN) is granted.

Professional tax

It is a tax on profession (including employment). Professional tax is applicable in some states in

India and the rate of tax also varies fromS

tate toS

tate.

Service Tax

Service tax is applicable on an entity which is engaged in providing prescribed services. Thereare more than 100 services on which service tax is currently applicable. The rate of service tax

presently is 10%.

Web resource : exciseandservicetax.nic.in

8/2/2019 Tarting a New Business is Not Rocket Science if One Keeps the Basic Lega

4/4