Month: January 2020

startup registration

The Complete Guide to Choosing Your Business Structure

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             Choosing a business structure is one of the most important decisions to be taken by entrepreneurs as a business can’t be successful only with a great idea and investment. A successful business also depends on the type of business structure entrepreneurs are using. You can take help of professionals for startup registration or online company registration in India as it involves less cost, less time and efforts.

We are explaining below business structures prevailing in India along with their features to help you in your startup registration:

Sole proprietorship

Sole Proprietorship is suitable for those businesses which are small in size or have limited investment. As there is a single owner, all the profit and loss is shared by that single person only. All the assets owned by the owner himself and the liability of the owner is limited to the extent of capital contributed by him. It is easy to form and does not have any legal formalities as compared to Partnership or Company.

Read Other Blog: WHAT IS MSME REGISTRATION FEES & PROCESS?

Partnership Firm

A Partnership Firm is an agreement between two or more persons or partners who come together to form a business. Partners make a partnership deed which is a written agreement specifying the names of each partner, address, capital invested by each partner and profit sharing ratio. All the partners have unlimited liability. Registration of a partnership firm is not mandatory but it is always advisable to register it.

Limited Liability Partnership

Limited Liability Partnership is formed to provide limited liability to its partners. It has benefits of both partnership firm and company into a single form of organization. Partners have limited liability to the extent of capital contributed by them and they don’t have to suffer on behalf of its other partners. It is easy to form and it is also easy to become a partner in LLP.

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Private Limited Company:

A Private Limited Company is a company which is owned privately by the individuals. The private company registration process is more flexible and easy as compared to Public company registration process because many provisions of the Companies’ Act 2013 are not applicable to it. The minimum number of directors required in it is 2 and the minimum number of shareholders required in it is 2 and the number of shareholders is limited to 50 only. It cannot invite the public to apply for its shares. It is more preferred by investors because they can buy/sell their shares easily.

Public Limited Company:

A Public Limited Company is a company which is owned by the public or in which the public can subscribe. It can raise capital from the public directly through issues of shares. The minimum number of directors required in it is 3 and the minimum number of shareholders required in it is 7 and there is no limit on the maximum number of shareholders. Its shareholders have limited liability to the extent of the face value of its shares and the premium respectively.

One Person Company:

One Person Company or OPC was introduced in India so that an individual person can also start his company. OPC has only one person as a member who can act in the capacity of a director as well as a shareholder. It is only permitted to a resident of India to incorporate OPC and any person from outside India cannot incorporate it. One person company registration process is easy as there are less legal requirements as compared to Private and Public company registration process.

                  The process of startup registration or online company registration in India is difficult to understand for entrepreneurs and also involves tedious documentation part. The company registration process also requires professional certification from professionals like CA, CS, and CMA. Therefore, it is better to consult professionals for startup registration and online company registration in India.

You can search such professionals on online directory of CAONWEB near you who can help you in startup registration and online company registration in India.     

Private Limited Company

How can a third party invest in a Private Limited Company?

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Among various types of businesses in India, Private Limited Company registration is favoured by businessmen to start a business by enjoying strong control over its operations. Private Limited companies are preferred by the promoters when medium scale operations are to be covered under proposed Business without any interference of the outsider’s i.e. public at large.

Private Limited companies are closely held companies. To invest into these companies, one needs to get in touch with the Directors, Promoters or the Shareholders of the Company as the shares of these companies are non-transferable unlike the shares of Public Limited Company. They need to be transferred by the existing shareholders and are not listed on a stock exchange.

A third party can invest in a Private Limited Company by way of

  • Equity shares: One needs to get in touch with the Directors, Promoters or the Shareholders of the Company as the shares of Private Limited Companies are non-transferable.
  • Debentures: Investment in debentures is the safest option, there are two kinds of debentures, convertible and non-convertible debentures.
  • Investment in the form of loans and advances: Private Limited Companies can only raise capital through private arrangements from its members, directors or their relatives etc.

Private companies are prohibited from inviting the public to subscribe for shares or debentures of the company and they cannot accept deposits from persons other than its members, directors or their relatives. So these Companies can only raise capital through private arrangements from its members, directors or their relatives, friends etc.

Getting an investor in the Company is an essential step for all businesses, Companies require external fund to cater to their growing requirements. However, an informed investor shall investigate into the working of the Company before lending the money. Investing in a Private Limited Company becomes advantageous due to various benefits offered by the said structure as well as the nature of the business.

Read more blogs: Private Limited Company

The investor needs to consider the following points for making an informed decision regarding Investment in a Company:

CONTROL: Control over the operations of the Company depends on the Shareholding ratio. The Shareholders having a stake in the Company can help direct the Company in the right direction. Shareholding enables an investor to make decisions for the company by availing the voting rights for the business to be transacted and conducted at meetings of members. Also where the investors are willing to take control over day-to-day working of the company, they have on option to appoint a representative in the Board called Nominee Director.

TAX IMPLICATION: Corporate tax is applicable on Private Limited Companies. The dividend on shares, if any, is given by the company to the shareholders is tax free in the hands of the shareholders.

MANAGEMENT: The investor has the option to take part in the day to day operations of the Company. If the investors are not willing to involve in the working of the company and have invested for profit only. It is not the obligation of the shareholders to engage in the day to day business activities and the same can be taken care by the Board of Directors of the company.

LIMITED LIABILITY: The investors are accountable for the amount held by them in the form of shares. This Limited Liability characteristic helps safeguard investors personal assets from loss made in the company. The risk of loss or failure of business is linked to the type of industry in which the company operates. Hence it safeguard the investors from extreme risk.

 INVESTMENT: As per the current trend, a start-up or a newly registered private limited company may run into losses at the initial stage of the operations. But the company may yield higher profit in long term. Investment here should be made after considering the Business Plan of the company in order to keep the risk at marginal level.

Conclusion: Investment decision in a Private Limited Company is ultimately based on the willingness of the investor. One needs to adopt a rational procedure before indulging in any project.

Read more blogs: Seven Steps for Private Limited Company Registration in Delhi

Frequently asked questions:


Who can invest in a private limited company?

Anyone can invest in a private limited company, but as Private Limited companies are closely held companies. To invest into these companies, one needs to get in touch with the Directors, Promoters or the Shareholders of the Company

Can a private limited company invest in another private limited company?

Yes, Private Limited Company invest in another private limited company

Can you invest in a private company?

Yes, one can invest in a private limited company, the process is covered in the above-mentioned blog.

How can a private limited company raise funds?

A private limited company raise funds through

  • Equity shares
  • Preference shares
  • Debentures
  • Investment in the form of loans and advances

Related Blog – Company incorporation in Dubai

Choose Your City For Company Registration.

Company Registration In Delhi

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Company Registration In Dubai

Company Registration In Hong Kong

Company Registration In China

Company Registration in dubai

HOW TO REGISTER A COMPANY IN DUBAI

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Dubai is one of the lucrative spots amongst all regions in the United Arab Emirates (UAE). UAE is a federation of seven emirates lying on the North-eastern coast of Arabian Peninsula. In this globalised era, where every business does not just want to limit their customer base to the geographical location they are based out of, rather wants to take it to new heights by removing the geographical barriers it comes with.

Company incorporation in Dubai-

Incorporation in Dubai would definitely prove to be a progressive decision for your business but at the same time it is more challenging. When it comes down to the cost involved in company incorporation in Dubai and how it will be done in case you are not a local resident there and you are not well-versed with the local surroundings. This is when an experienced consultant comes into picture who will guide you throughout your journey of company incorporation in Dubai.

FORMS OF COMPANY INCORPORATION IN DUBAI

1.       On the basis of Jurisdiction

1.1.   On-Shore: An entity that is incorporated in its home land with the sole purpose of doing business activities within the specific jurisdiction. Various benefits associated with establishing an on-shore business such as favourable regulation, tax regulations, banking & support sectors.

1.2.   Off-Shore: Any entity which is formed in a foreign country which is managed outside the jurisdiction of the company.

1.3.   Free-zone: These are special economic zones which are setup to promote the business environment in Dubai by giving away certain additional perks to those planning to set-up their business in these regions.

2.       On the basis of ownership/holding

2.1.   Limited liability: Limited liability partnership is a form of business entity in which the liability of an individual is limited to its share in the capital. Under Limited liability Company, the liability of the shareholders is limited to their share in capital. Maximum 50 & minimum 2 members are required to register a company as Limited liability in Dubai.

2.2.   Sole proprietorship: For a foreign potential investors, the procedure for incorporation in UAE allows an investor to start a company without any UAE national being a partner in the company. However, the foreign investor must incorporate fee based service agent instead of a “sponsor” to sign important documents.

2.3.   Private limited: It refers to possession of a big business corporation firstly, by non-governmental organizations and secondly, by a relatively small number of holders who do not trade the stock publicly.

2.4.   Public limited: A company where the business capital is divided into equal shares, with each shareholder’s liability limited by their respective number of shares.

2.5.   Branch office: Location other than the head office or the registered office of the company, which acts as an additional office for operations of the company.

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WHY COMPANY INCORPORATION IN DUBAI?

·         Geographical location

·         Taxation benefits

·         Flexible business environment

·         Endless opportunity for entrepreneurs

WHY CAONWEB?

·         Company incorporation in Dubai could prove to be a hectic job unless you are well aware of the law which is applicable in the gulf region. This is where any business establishment needs a consultant who is having the required experience of company incorporation in the region.

·         We at CAONWEB has the most trusted and experienced professionals who have a decade long history of serving the clients.

·         Help our clients in selecting the most lucrative location for their business setup in Dubai.

·         Expertise in cross-border transactions.

 Now Register your Company In China

Dubai Company Registration (FAQ’s)

How can I register a company in Dubai?

There are various forms of company which can be incorporated in Dubai viz. On-shore, Offshore & Free-zone Company. There is slight difference in the company registration process of these companies but more or less their process remains the same.

Follow the steps for company incorporation in Dubai.

·         Define nature of business.

·         Choose a name for your company.

·         Check the jurisdiction under which your business will operate.

·         Apply for license with the authorities.

·         Attach all the documents necessary for company incorporation.

·         Review the share capital requirements.

·         Submit your application with the authorities.

What kind of business can I start in Dubai?

An individual can start any sort of business in Dubai, there is no restriction on type of business but the licensing process is different for different forms of business.

Legal forms of companies in Dubai

·         Sole proprietorship

·         Partnership firms

·         Limited liability company

·         Private shareholding

·         Public shareholding

·         Branch office

Types of Trade licenses issued in Dubai?

·         Commercial

·         Industrial

·         Professional

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How many jurisdictions involved for company incorporation in Dubai?

Majorly there are 3 categories under whose jurisdiction companies can be formed:

·         On-shore company

·         Off-shore company

·         Free-zone company

What is Dubai economy based on?

Primarily the economy of Dubai was based on its petroleum production but with the time Dubai has emerged as one of the most lucrative business destination because of the incentives Dubai is offering to encourage business on their soil.

Now every new entrant or an established company is planning to take their business overseas, most likely to Middle East (Dubai).