The Journey from an Idea to Reality
Once in a while, every single one of us must have had this very thought of starting our own company. Who wants to work under some lousy boss for their entire life? Starting a company seems like a perfect escape from those boring, monotonous jobs. We all fancy living life in the fast lane, goofing around the world, and making the most out of our lives. After all, we have seen all those rich guys with a lot of brass in their pockets, and doing almost everything they can dream of.
But one must also reach that level for that kind of lifestyle, or spend the rest of his miserable life dreaming. One way is having a company of his own to make him money. But setting up a company is no cakewalk. It’s a tedious process that one has to work one’s ass off. Most successful way is to look for a problem faced by a large group. Then try to find a viable and economic solution to it. Then you have to assemble a team of individuals for your company who share your vision and are passionate about it. If you managed to do all this, you have a nice company that caters to the need of a mass. Then comes the registration of the company.
A company can be of roughly four types based on the legal structure and associated liabilities — sole proprietorship, general partnership, private limited company, and limited liability company. There are even more type with little variations from the above types. But these are the ones that are more often preferred by people interested in business. In a sole proprietorship, your company is basically same as you, that is the law sees you and your company as the same entity. So in case the you or your company are bankrupt or in loss, your entire company and its assets are all gone. A general partnership is a similar arrangement between 2 or more individuals. Here also, the liabilities are high for individual partners as there personal assets are also liable to be seized in case of a violation to partnership obligations. Private limited company is a somewhat less harsh than the previous 2 types. Here, the law sees the company and the business holder as 2 distinct individuals with some common assets. So in case of any financial crisis, the assets of the business holder are safe and are not liable to any sort of seizure. A limited liability company, on the other hand, a corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship. While the limited liability feature is similar to that of a corporation, the availability of flow-through taxation to the members of an LLC is a feature of partnerships.
Now there are a whole range of businesses that require the owner to buy a license, ranging from babysitting and barber shops to big established businesses. Also specific licenses may be needed based on the product or services that one’s company is providing. You might even need one for your own company. Like if you are into trading booze, you need a specific license for that. Else you might find the Bajrang Dal knocking at your front door someday.
If you are registering a startup or a new business in India then first and foremost, there are some official procedures a startup or a company has to follow in order to register them in Indian official records. Earlier, there was a ton of procedure that one had to follow to get the needed licenses and other documents for their business. But in the 21st century, almost everything can be done from home. Steps are easy to follow once your company has some solid foundation.
Firstly one has to register under the Ministry of Corporate Affairs website and have a login id.
Next step is obtaining the Director Identification Number (DIN). Each director of the company should obtain their identification number. To get DIN one needs to file a DIN-1 form available on official site of the Ministry of Corporate Affairs (MCA). After filling up the necessary details, the form is uploaded and applicable fees are paid.
After getting generated DIN one should intimate their company about DIN. The director can intimate their company about DIN by using a DIN-2 Form. The company should intimate the Registrar of Corporate (ROC) about all director’s DIN through DIN-3 Form. If there is any change in DIN or need for any updation like change of address, personal details etc, the director should intimate this change by submitting the DIN-4 Form.
The next step is acquiring a Digital Signature Certificate (DSC).In order to ensure the security and authenticity of documents filed electronically, the information act demands a valid digital signature on the documents submitted electronically. This is the one of the safest way that one can submit their documents electronically. The digital signature certificate should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA). One should not use DSC given by any other agency which is not approved and it’s illegal to use others DSC as yours or the false one.
The next step gives the company its face. This involves incorporating company name, registering the office address and notice for appointment of company directors, manager and secretary. And also regarding the take and pay for their qualification shares. This includes the following forms which are available on the MCA website:
1. Form-1A: Application form for availability or change of a company name. Once you apply for new company name, the MCA will suggest four different form of your company name; you have to choose one among them. To do the same you have to fill Form-1A and submit.
2. Form-1: This is for application or declaration for incorporation of a company, in this form you have to fill the same name which you have chosen during application of form-1A. The company name must be unique, and cannot resemble the name of any other company already registered in any way.
3. Form-18: This form is for notice of the location of office of your company.
4. Form-32: This form is for notice for appointment of new directors, managers and secretary.
Now a company
After submitting these forms, once the application has been approved by MCA, you will receive a confirmation email regarding the application for incorporation of a new company, and the status of the form will get changed to Approved.
So finally after all the pain and hard work you been through, you finally get a thumbs up from the Government and are all set to rock in the corporate world.
