FINANCE & TAXATION

1Advantages

While there is no single "Proprietorship Act," the firm is established through various government licenses. Here is the step-by-step procedure:

• No minimum capital is required, and government registration fees are minimal making it cost effective
• There is no requirement to get audited and disclose your financial accounts to the public hence allows complete confidentiality
• You don't have to share profits with anyone giving a direct incentive
• Winding up the business is also simple making it hassel free.

2Procedure and Documents

Just select a name, get registered with MSME to get a permanent identity and government benefits.& GST if your turnover exceed the threshold limit along with opening a Bank account to get your business started.

To ensure a smooth registration process, keep the following digital copies ready:

• Identity Proof: PAN Card of the Proprietor.
• Address Proof: Aadhaar Card, Voter ID, or Passport.
• Office Address Proof: Latest Electricity Bill, Gas Bill, or Rent Agreement.
• NOC: A No Objection Certificate from the property owner (if the office is rented).

3Compliance & Tax Implications

• Income Tax: The business income is added to the owner’s personal income. Tax is charged as per individual Income Tax Slabs.
• Audit: A tax audit is mandatory only if the total turnover exceeds ₹1 Crore (or ₹10 Crores if 95% of transactions are digital).
• GST Returns: If registered under GST, you must file monthly or quarterly returns as the case may be.

1Key Features

Choosing a One Person Company offers several advantages for new entrepreneurs.

• Only one natural person (Indian citizen & resident) can incorporate an OPC giving them a Solo Ownership.
• It's mandatory to appoint a "Nominee" who will take over the company in case of death or disability making it convenient for the legal heirs in future.
• Your personal assets are protected in case business faces financial loss hence it has Limited Liability.
• The company continues to exist even if the owner changes giving it the status of Perpetual Succession.

2Advantages

• The business and the Owner are different so there it is a Separate Legal Entity.
• The Liability of the Owner is Limited hence it is considered Safe.
• The scale of operations is generally high as compared to a Proprietorship firm therefore has a Corporate Image.
• Banks prefer and offer loans to companies so OPC's have High borrowing power.

3Procedure and Documents

The registration is handled entirely online through the Ministry of Corporate Affairs (MCA) portal. The proposed Director has to obtain a DSC. The OPC has to reserve a unique name through a name approval form and submit various documents to get PAN/TAN/DIN and Incorporation Certificate.

• PAN Card, Aadhaar, and latest Bank Statement.
• PAN, Aadhaar, and Consent Letter (INC-3).
• Utility bill (Electricity/Water) and an NOC from the property owner.
• Recent passport-size photos of the Director.

4Compliance & Tax Implications

• Statutory Audit of accounts by a Chartered Accountant is mandatory.
• Annual Filings with ROC in Form AOC-4 (Financial Statements) and MGT-7 (Annual Return) is mandatory
• Board Meetings is mandatory where atleast one board meeting must be held in each half of a calendar year (minimum 90 days apart).
• Income Tax: OPCs are taxed at a flat rate (plus applicable surcharge and cess).

1Key Features

• Minimum 2 Members are needed to start Private limited company (and can have up to 200).
• Venture Capitalists and Angel Investors prefer only Private Limited Companies for Investment opportunities.
• It is FDI Friendly as 100% Foreign Direct Investment (FDI) is allowed in most sectors via the automatic route.
• You can issue Employee Stock Option Plans to attract top-tier talent.

2Advantages

• The number of owners can range from 2 to 200 giving more strength and power for managing the company
• Considered to be the most credible for Banks, Venture Capitalists and Angel Investors.
• Procedure for share transfer is very easy and simple

3Procedure and Documents

In 2025, registration is streamlined through the SPICe+ web form. This single application handles everything from name approval to tax registration. Directors are required to obtain DSC and reserve a unique name through a name approval form submit various documents to get PAN/TAN/DIN/EPFO & ESIC and Incorporation Certificate. The director also has to file a form providing forms INC-33 and INC-34 to define your company's "Charter" and "Rules."

Once all the forms are approved ROC issues Certificate of Incorporation and CIN

Ensure you have clear, scanned copies of the following for all directors:

• Identity Proof: PAN Card (Mandatory).
• Address Proof: Aadhaar, Voter ID, or Passport.
• Latest Proof of Residency: Bank statement or utility bill (not older than 2 months).
• Registered Office Proof: Utility bill and a No Objection Certificate (NOC) from the owner.

4Compliance & Tax Implications

• It is mandatory to appoint an auditor Within 30 days of incorporation.
• INC-20A (Commencement of Business): Must be filed within 180 days before starting operations.
• Board Meetings: Minimum of 4 meetings per year (one every quarter).
• Annual Filings: AOC-4 (Financials) and MGT-7 (Annual Return) filed with the MCA every year.

1Key Features

• One can start LLP with any amount of contribution as there is No Minimum Capital requirement.
• Minimum 2 partners are required, but there is no upper limit giving an option of unlimited partners
• Managing an LLP practically requires no compliance. There is no mandatory requirement for board meetings or annual general meetings (AGM).
• It is Tax Efficient as no Dividend Distribution Tax (DDT) is levied when partners withdraw profits.

2Advantages

• Registration cost is low.
• Annual Audit is mandatory only if turnover is greater than the threshold limit.
• Managing an LLP is flexible as compared to Pvt limited company
• Minimum compliance

3Procedure and Documents

The Ministry of Corporate Affairs (MCA) has streamlined the process through the V3 Portal.. Directors are required to obtain DSC and reserve a unique name ending with LLP through a name approval form and submit various documents to get PAN/TAN/DPIN and Incorporation Certificate. The director also has to file a form providing forms INC-33 and INC-34 to define your company's "Charter" and "Rules."and Filing the LLP Agreement (Form 3) which is a Crucial Step. Within 30 days of incorporation, you must submit the signed and stamped LLP Agreement defining the partners' roles and profit-sharing ratios.

• For Partners: PAN Card, Aadhaar Card, Passport size photo, and Address proof (latest Bank Statement or Utility Bill).
• For Registered Office: Digital copy of the latest Utility Bill (Electricity/Gas/Water), Rent Agreement (if premises are rented), No Objection Certificate (NOC) from the property owner.

4Compliance & Tax Implications

To keep your LLP in "Active" status, you must file two main returns every year:

• Form 11: Annual Return (Due within 60 days of the end of the financial year).
• Form 8: Statement of Accounts & Solvency (Due within 30 days from the end of six months of the financial year).
• Income Tax Return: To be filed annually by July 31st (or Sept 30th if audit is applicable).

1Key Features

• Ability/Right to sue i.e file legal suits against third parties or partners.
• Credibility is Enhanced trust with banks, vendors, and clients.
• Clear definition of profit-sharing and liability giving Legal Protection

2Advantages

• Tax and compliance is easy.
• Its not mandatory to register therefore doesn’t involve much costs making it cost effective.
• Easy formation with less paperwork.
• Risks and rewards are shared and the burden is reduced.

3Procedure and Documents

Preparing a comprehensive deed covering profit ratios, capital contribution, and dispute resolution ad filing Form 1 and supporting affidavits with the Registrar of your respective state.

• Partnership Deed (on valid stamp paper).
• PAN Cards and Aadhar/ID proof of all partners.
• Proof of Business Address (Rent agreement or Utility bill).
• NOC from the property owner (if the premises are rented).
• Photographs of all partners.

1Key Features

• The ability to issue shares to the public via an IPO.
• Increased trust among investors, banks, and global partners gives Credibility
• Unlimited Shareholders unlike Private Limited firms, there is no cap on the number of members.
• Liquid ownership makes it easy for investors to buy and sell stakes and Free Transferability of Shares
• The company exists independently of its owners or directors giving it a status of Perpetual Succession

2Advantages

• Ability to raise large capital from Public
• Shares are tradeable on Stock Exchanges
• Limited liability for Shareholders
• Increased growth and expansion opportunities

3Procedure and Documents

In 2025, registration is streamlined through the SPICe+ web form. This single application handles everything from name approval to tax registration. Directors are required to obtain DSC and reserve a unique name ending with Limited through a name approval form submit various documents to get PAN/TAN/DIN/EPFO & ESIC and Incorporation Certificate. The director also has to file a form providing forms INC-20 to officially start the business. A public limited Company requires a minimum of three directors and minimum of 7 shareholders for registration.

Once all the forms are approved ROC issues Certificate of Incorporation and CIN

• For Directors/Shareholders: PAN Card, Aadhaar, Passport-size photos, and Address Proof (Bank Statement/Utility Bill).
• For Registered Office: Rent Agreement/Sale Deed and a No Objection Certificate (NOC) from the owner.
• Legal Drafts: Signed MoA and AoA along with the DIR-2 consent forms.

1Key Features

• Entities don't need to add "Limited" or "Private Limited" to their name.
• Tax Exemptions as section 8 Company is Eligible for 12A and 80G registrations, providing tax relief to both the company and its donors.
• Higher trust factor for CSR (Corporate Social Responsibility) funding from large corporations giving it a Global Recognition.
• No Minimum Capital is required to register.
• Limited Liability of the owners.

2Advantages

• The section 8 companies are exempt from paying stamp duty on MOA & AOA
• Can receive foreign donations by registering under the Foreign Contribution Regulation Act (FCRA), allowing them to accept contributions from non-residents or overseas donors.
• A Section 8 Company enjoys perpetual succession, meaning it continues to exist and operate even if its members resign or pass away.

3Procedure and Documents

The registration of a Section 8 Company involves an additional layer of approval—the Section 8 License—before the Certificate of Incorporation is issued. Directors are required to obtain DSC and reserve a unique name ending with words like Foundation, Federation, Association and Forum through a name approval form and submit form RD-1 to the Regional Director with a detailed 3-year work plan and financial projections.

Once all the forms are approved ROC issues Certificate of Incorporation and CIN

• Identity Proof: PAN and Aadhaar of all directors/promoters.
• Address Proof: Latest Bank Statement, Electricity Bill, or Telephone Bill.
• Registered Office Proof: Rent agreement and an NOC from the owner.
• Social Objective Plan: A detailed statement of the proposed work and estimated income/expenditure for the next 3 years.