Incorporation

If you are thinking to starting a business with your entrepreneurial vision, we have got you covered! At GenZCFO, we understand that starting a business is a significant step toward achieving your dream startup, and choosing the right legal structure is very important while incorporating your business. It helps you in formalizing your operations, protecting personal assets, and enhancing credibility. With GenZCFO, you gain a partner who not only guides you through the incorporation process but also supports you with ongoing compliance and strategic financial management. Whether you're just starting out or looking to optimize an existing business, our tailored services are designed to meet your specific needs and help grow to achieve success.

Our Incorporation Services are designed to guide you through the complete process, applicable forms and regulations in India to ensure your venture starts on a solid foundation. Whether you're considering a Private Limited Company Registration, One Person Company (OPC), Limited Liability Partnership (LLP), Partnership Firm, Sole Proprietor, we can help you with all the necessary information to make an informed decision. GenZCFO is a trusted name for India Entry Services and can help you with the registration of Wholly Owned Subsidiary Company along with FEMA Compliance. Not just this, we also help our clients with the Overseas Company Registration in major locations like USA, Dubai, Singapore, London etc.

Just in case you are looking to setup your NGO, we can also help you with the Trust Registration, Society Registration and Section 8 Company Registration to get you started with your social cause along with necessary licenses like Niti Ayog, 80G/12A, CSR Registration, FCRA License.

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Why Incorporate?

Incorporating your business is a crucial step that can shape its future success and sustainability. This process legally separates the business from its owners, providing essential benefits that can protect, enhance, and define the structure of your new venture. Here are some compelling reasons why you should consider incorporation:

Legal Liability Protection: Incorporation establishes your business as a separate legal entity, which means your personal assets remain protected in the event of business liabilities or debts.

Enhanced Credibility: Registered businesses often gain greater trust from customers, suppliers, and potential investors, as incorporation demonstrates a commitment to long-term operations.

Attracting Investment: Companies can attract funds more easily through Startup India Recognition, Angel Network, VC Firms, or through other investment opportunities, facilitating growth and expansion.

Perpetual Existence: Incorporated businesses can continue to operate regardless of changes in ownership, which can be critical for long-term business planning and legacy building.

Tax Benefits: Depending on the structure chosen, a business can benefit from tax advantages that are not available to unincorporated entities, such as lower tax rates and the ability to write off business expenses.

Brand Protection: Incorporating can help protect your brand and name by preventing other businesses from registering the same or a highly similar name. Further, we suggest you check out IPR Advisoryto learn more as to how GenZCFO can help you with Trademark Registration, Copyright Protection, Patents, GI and Design.

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Business Entity Types in India

Choosing the right type of business entity is critical as it influences your chances to get investment, issue ESOPs, understand the compliance cost, daily operations, how much you pay in taxes, and the level of risk to your personal assets. Here are the key types of entities you can register in India, each with distinct advantages and considerations:

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Private Limited Company (PLC)

Description: Ideal for businesses that plan to raise funds and scale. A Pvt Ltd Company is a separate legal entity from its owners with a limit on shareholder liability. 

Benefits: Attracts Angel / Venture capital, enjoys limited liability, ESOP Policy and most recognised form of business structure.

Considerations: Requires at least two directors, mandatory audit, and more stringent regulatory compliances. In case of One Person Company, one person will be required to be Member/ Shareholder along with one Nominee.

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Limited Liability Partnership (LLP)

Description: Suitable for professional services firms like law practices or consultancy agencies. It combines the flexibility of a partnership with the benefits of limited liability. 

Benefits: Offers flexibility without the need for board meetings and fewer compliance burdens than a Private Limited Company. Audit is not mandatory if capital contribution and turnover are less than 25 Lakhs and 40 Laksh respectively.

Considerations: Not ideal for businesses looking to raise equity funds as investors prefer Private Limited Company. However, you can convert LLP to Private Limited as part of business conversion any time after registration.

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Partnership Firm

Description: Formed by two or more individuals who agree to share the profits of a business operated by all or any one of them acting for all. 

Benefits: Simple to set up and operate with minimal regulatory burdens. 

Considerations: Partners are jointly and severally liable for the actions of other partners and the business, posing a higher personal risk.

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Sole Proprietorship

Description: The simplest form of business, owned and operated by one person, without distinction between the owner and the business entity. 

Benefits: Easy to establish with minimal compliance requirements and complete control over operations. 

Considerations: The owner is personally liable for all business debts and obligations, which can jeopardize personal assets.

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Comparative Analysis of Business Entities

Each business entity serves different business needs and scales, and therefore it is important to consider your long-term business goals and operational style when choosing the right structure. You can hire a GenZCFO to learn more on this. Here's a detailed comparison of the key factors across the four primary types of business entities in India:

Factor	Private Limited Company	Limited Liability Partnership	Partnership	Sole Proprietorship
Cost of Formation	High, due to registration fees and legal costs	Moderate, fewer fees than Pvt Ltd Company	Low, minimal fees	Very low, minimal to no fees
Compliance Requirements	High, requires annual audits, regular filings, and mandatory compliance	Moderate, requires annual filings but no mandatory audits*	Low, minimal reporting requirements	Very low, basic tax filings
Tax Implications	Taxed as a separate entity, potential for tax benefits	Pass-through taxation, avoids double taxation	Pass-through taxation, personal tax rates apply	Taxed as personal income, simple tax process
Liability	Limited liability, personal assets protected	Limited liability, protects personal assets	Unlimited liability, personal assets at risk	Unlimited liability, personal assets at risk
Ease of Raising Capital	Easier to attract investments through equity	Possible but less attractive to investors, banks can loan	Difficult, relies on personal contributions and loans	Difficult, limited to personal funds and loans
Suitability	Best for businesses looking to expand and attract employees by issuing ESOPs	Ideal for professional services and ventures needing flexibility without complex compliance	Suitable for small-scale businesses with close-knit ownership	Perfect for solo entrepreneurs starting with minimal capital investment

Mandatory Audits in LLP*

Upto 25 Lakhs of Capital Contribution and 40 Lakh of Turnover, Audit is not mandatory in LLP.

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Incorporation Process

Company and LLP are registered on the www.mca.gov.in while Partnership Firm and Proprietorship Firm do not have any standard registration. Most startup founders start the incorporation journey with less information and struggle later as it involves a series of structured steps tailored to each business type. Below, we detail the common processes involved across all entity types, highlighting specific requirements where they differ.

Step 1: Choosing a Name

First, select a unique name that is available as per the MCA and Trademark Laws. Even though if you are considering a Partnership or Sole Proprietor, it is recommended that you go through a Trademark Search Report for checking name availability and ensuring it does not infringe on existing trademarks.

Step 2: Documentation

Prepare the necessary documentation, which varies by entity type. In most cases, you need to have the basic KYC documents for the Directors/ Designated Partners, Partners, Proprietor that includes the below if you are an Indian Citizen:

• PAN Card is mandatory
• ID Proof: Aadhar Card, Voter ID, Driving License, Passport
• Address Proof: Bank Statement, Mobile/ Telephone/ Electricity Bill

In case of foreign nationals, passport is mandatory.

For Registered Office, Utility Bill like Electricity/ Mobile/ Telephone/ Gas Bill is required along with NOC and Rental Agreement.

Step 3: Registration

File the incorporation forms with the MCA website with the Registrar of Companies for Private Limited Company and LLPs. This process includes paying the requisite government fees and applicable stamp duty. You can reach out to GenZCFO Advisors to learn more on this.

Step 4: Obtaining Licenses and Permits

Depending on your business's nature and location, various licenses and permits may be required to operate legally.

Step 5: Opening a Bank Account

Approach a banker for the current account opening in the name of your business to manage finances separately from personal funds. 

Step 6: Tax Registration

Register for the appropriate taxes with GST Advisory, TDS Advisoryincluding Professional Tax, and others as required by your business operations.

Each of these steps ensures that your business is set up legally and is ready to operate in the regulatory environment of India. Following these steps diligently will help you establish a robust foundation for your business and GenZCFO can guide you all through the way here.

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Post-Incorporation Compliance

Once your business is incorporated, maintaining book-keepingand compliance with the regulatory requirements is crucial to avoid legal challenges and to ensure smooth operations including Income Tax Advisory. Here’s what you need to know about post-incorporation compliance for different business structures:

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Private Limited Company (PLC)

First Auditor Appointment, Filing of Declaration for Commencement of Business (INC-20A), Issuing Share Certificates, eStamping of Shre Certificates.

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Limited Liability Partnership (LLP)

Filing of Form 3 with the LLP Agreement as per the Stamp Act of the state where the LLP is registered within 30 days of the LLP Registration.

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Partnership Firm

There is no post incorporation compliance as such.

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Sole Proprietorship

There is no post incorporation compliance as such.

Some FAQs That GenZCFO Often Get Asked