Private Limited Company vs. Limited Liability Partnerships
MARCH 15, 2024
Private Limited Company vs. Limited Liability Partnerships

Starting a business in India? Fantastic! Now, let's tackle the first big decision – registering your business. So, how do you choose the appropriate legal structure for your business?

Private Limited Companies and Limited Liability Partnerships (LLPs) emerge as the two most prevalent options. In this blog, we are highlighting the distinctions between these legal structures, providing insights that can empower you to make an informed decision.

Difference between Private Limited and Limited Liability Partnerships

Private Limited Companies and LLPs are two distinct forms of business structures, each with its own set of characteristics, advantages, and disadvantages. Here's a brief comparison between the two:

Private Limited Company

Limited Liability Partnership

Governing Act

Governed by the Companies Act

Governed by the Limited Liability Partnerships Act

Suitable For

Financial Services, Tech Startups, Medium Enterprises

Consultancy firms, Professional Services

Shareholders/ Partners

Minimum- 2
Maximum- 200

Minimum- 2
Maximum- Unlimited

Minimum Capital Requirement

No minimum capital requirement, but it is often advised to set the authorized capital at ₹1,00,000 (One Lakh) INR

No minimum capital requirement, but it is often advisable to consider an initial capital of ₹10,000 INR

Tax Rates

The basic tax rate, excluding Surcharge and Cess-25%

The standard fixed rate-  30% on their generated earnings.

Fundraising

Easier to raise funds from Investors

Raising funds can be challenging

Transfer of Shares

Shares can be easily transferred by amending AOA

Transfer of partnership rights may require the consent of other partners and is generally more complex

ESOPs

Can issue ESOPs to the Employees

Unable to issue ESOPs to the Employees

Agreements

Duties, Responsibilities, and other basic clauses outlined in MOA and AOA

Duties, Responsibilities, and other basic clauses outlined in MOA and AOA

Compliances

• More compliance costs
• Mandatory 4 Board Meetings
• Mandatory Statutory Audits
• Mandatory filings include Annual financial statements in form AOC-4 and annual returns in Form MGT-7, etc.

• More compliance costs
• Mandatory 4 Board Meetings
• Mandatory Statutory Audits
• Mandatory filings include Annual financial statements in form AOC-4 and annual returns in Form MGT-7, etc.

Dissolution

More complex
Can be initiated by filing STK-2 form

Less Complex 
Can be initiated by filing the Form 24.

While the differences between LLPs and Private Limited Companies are numerous, they share similarities in key aspects:

  • Limited Liability
  • Separate Legal Identity
  • Registration Process with the MCA
  • Perpetual Succession

Let’s understand the key features and registration process in detail for both Private limited companies and LLPs.

What is a Private Limited Company?

A Private Limited Company is a type of business structure that is characterized by limited liability and a separate legal entity. Listing down some key features of a Private Limited Company below:

1. Limited Liability

The liability of Shareholders is limited. Personal assets are generally protected from business debts.

2. Separate Legal Entity

A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.

3. Ownership

Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.

4. Management

Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.

5. Number of Shareholders

Requires a minimum of two shareholders and can have a maximum of 200 shareholders.

6. Regulation and Compliance

Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings, and maintaining statutory records.

7. Regulation and Compliance

Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

  • Limited Liability: The liability of Shareholders is limited. Personal assets are generally protected from business debts.
  • Separate Legal Entity: A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.
  • Ownership: Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.
  • Management: Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.
  • Number of Shareholders: Requires a minimum of two shareholders and can have a maximum of 200 shareholders.
  • Regulation and Compliance: Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings, and maintaining statutory records.
  • Investment and Funding: Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

Private Limited Company Registration

The Ministry of Corporate Affairs (MCA) has introduced a streamlined process for incorporating companies called Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), consisting of two parts: Part A and Part B.

1. Step 1: Acquire a Digital Signature Certificate (DSC)

• A Digital Signature Certificate (DSC) is a digital method of verifying or attesting documents.
• It is typically issued with one or two-year validity and is mandatory for all witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).
• Class 2 or 3 DSCs can be obtained through listed Government Certifying Agencies (CAs).

2. Step 2: Apply for Name Approval using SPICe+ Part A

• Part A facilitates 'Name Reservation' with two proposed names and one re-submission (RSUB).
• In case of name rejection due to various reasons, a re-filing with the specified fee is required.

Note: Simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is possible, but only one name can be reserved.

3. Step 3: Apply for Company Registration using SPICe+ Part B

After name approval, Part B completes the registration process, including:

  • • Application for allotment of Director Identification Number (DIN)
    • Incorporation of the new company
    • Submission of e-MoA (INC-33) and e-AoA (INC-34)
    • Application for PAN and TAN (mandatory)
    • Application for EPFO registration (mandatory)
    • Application for ESIC registration (mandatory)
    • Application for Professional tax registration (only for Maharashtra)

The entered information in SPICe+ Parts A and B is automatically transferred to associated forms like AGILE-PRO, eAoA, eMoA, URC1, and INC-9, as applicable.

4. Step 4: Open a Bank Account

Open a current account for your company to facilitate seamless financial transactions and business operations, handling various aspects such as receiving payments, making supplier payments, and managing payroll.

5. Step 5: File for the Commencement of Business Certificate

The Commencement of Business Certificate, filed through Form INC-20A within 180 days of incorporation, is a declaration by the Director of the Company submitted to the Registrar of Companies.

Register your Private Limited Company in just ₹6,999

Register your business

After the SPICe+ Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

This certificate includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

What is a Limited Liability Partnership? 

A Limited Liability Partnership (LLP) is a business structure that combines features of both a traditional partnership and a limited company. Limited Liability Partnerships are often chosen by professional services firms, small businesses, and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Some key characteristics of a Limited Liability Partnership are:

1. Limited Liability

Similar to a private limited company, partners in an LLP have limited liability.

2. Separate Legal Entity

An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.

3. Ownership

Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.

4. Management

Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.

5. Number of Partners

Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.

6. Regulation and Compliance

Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.

7. Flexibility

Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

  • Limited Liability: Similar to a private limited company, partners in an LLP have limited liability.
  • Separate Legal Entity: An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.
  • Ownership: Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.
  • Management: Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.
  • Number of Partners: Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.
  • Regulation and Compliance: Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.
  • Flexibility: Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

Limited Liability Partnerships Registration

Here's a simplified guide on the steps for Limited Liability Partnership (LLP) registration:

1. Step 1: Apply for DSC

  • Obtain a Digital Signature Certificate (DSC) from Government Certifying Agencies with one or two-year validity.

2. Step 2: Name Reservation

  • Reserve the LLP's name using the LLP-RUN form.

3. Step 3: Apply for Registration through FiLLiP

  • Complete the FiLLiP (Form for Incorporation of Limited Liability Partnership) and submit it to the Registrar. Alongside FiLLiP, submit the Subscriber sheet and Partner's consent (Form 9) as additional documentation.

4. Step 4: File LLP Agreement

  • File the LLP Agreement using Form 3 on the MCA portal within 30 days of LLP registration.

    After the FiLLiP Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, a crucial legal document confirming the successful registration of your company.

    This certificate includes vital information such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and more.

    Example of LLPIN: AAA-1234

    Register your Limited Liability Partnership in ₹4,999

    Register your business

    Company Registration with Razorpay Rize

    Experience a hassle-free, 100% online business registration process with Razorpay Rize, featuring the lowest professional fees and absolutely no hidden charges. Explore the diverse range of services tailored to suit the needs of both startups and established businesses.

    Private Limited Company
    (Pvt. Ltd.)

    ₹5,999
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    ₹4,999
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    Private Limited Company
    (Pvt. Ltd.)

    ₹5,999
    BEST SUITED FOR
    • Service-based businesses
    • Businesses looking to issue shares
    • Businesses seeking investment through equity-based funding


    Limited Liability Partnership
    (LLP)

    ₹4,999
    BEST SUITED FOR
    • Professional services 
    • Firms seeking any capital contribution from Partners
    • Firms sharing resources with limited liability 

    Our package includes:

    • Company Name Registration
    • 2 Digital Signature Certificates (DSCs)
    • 2 Directors’ Identification Numbers (DINs)
    • Certificate of Incorporation(COI)
    • MoA & AoA [Applicable for Private Limited Companies and OPCs]
    • LLP Agreement [Applicable for LLPs]
    • Company PAN & TAN

    *Prices and documents can differ based on the company type.

    Which company type should you register your business with?

    Before proceeding with the registration of either an LLP or a company, it is crucial to evaluate the following factors carefully.

    • Consider the nature and size of your business

    • If you operate a small business with a limited workforce, opting for LLP registration might be more favorable, given the relatively lighter compliance requirements compared to a company. On the other hand, for larger businesses with substantial employee numbers and capital needs, registering as a company provides greater flexibility in raising capital.

    • Fundraising requirements

    • If your goal is to raise funds through equity, choosing a company structure is imperative. However, if your fundraising needs are more straightforward, the LLP structure may be a more suitable option.

    • Tax rates

    • It's essential to compare the tax rates applicable to both company and LLP structures, as there can be significant differences. Opt for the structure that aligns with your financial goals based on total income or turnover.

    Personal liability protection

    • While an LLP offers limited liability protection, a company structure treats the company as a distinct legal entity, safeguarding shareholders' personal assets.

    Ultimately, the choice between a company structure and an LLP structure hinges on the unique characteristics of your business, including its nature, size, and capital requirements.

    Find Your Ideal Company Type

    If you still need more help deciding which company type to register with, don't worry! We’ve got you covered with our latest tool - "Know Your Company Type."

    Know Your Company Type

    Answer our questions and discover the ideal business structure for you.

    For the first time in India, simply answer a quick set of questions about your startup, and this tool will leverage your responses to identify the ideal company registration type. Find your perfect fit with just one click!

    Explore side-by-side comparisons of popular company types for added clarity and make informed choices effortlessly!

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    <H1> Startup India Seed Fund Scheme

    As a part of the “Startup India” program, the Startup India Seed Fund Scheme was introduced in 2021 to facilitate the process of creating a robust startup ecosystem and providing financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.

    Description

    Who is it for?

    Benefits

    To provide monetary support for proof of concept, prototype development, product trials, market, and commercialization

    Startups using Technology as their core product or service

    Under this scheme, Financial assistance up to Rs. 50 lakh will be provided to startups at an early stage through incubators

    <H2> Eligibility 

    • Should be recognised by DPIIT.
    • Startups should not have received more than Rs 10 lakh of monetary support under other significant government schemes.
    • The Startup shall have been in existence for no more than two years at the time of application.
    • Should be using technology as its core product or service to create innovative solutions in different sectors.
    • Must have a business idea to develop the product with a scope of scaling
    • According to the Companies Act of 2013 and the SEBI (ICDR) Regulations of 2018, Indian promoters must own at least 51 percent of the company at the time of application to the incubator.
    • The seed support is generally available in grants and debt/convertible debentures.

    <H2> Application procedure for Startups 

    The application procedure for availing the seed fund from the incubators by the startups under the StartUp India Seed Fund Scheme is as follows:

    <H3> Startup India Registration

    • Go to https://seedfund.startupindia.gov.in/.
    • On the top right side of the homepage, click the 'Login' button, then the 'Create an Account' option at the bottom of the "Login" tab.
    • The ‘Startup India’ registration page will open.
    • After filling out the form, click the 'Register' button.
    • An OTP will be sent. Enter the OTP and click the ‘Submit’ button.

    <H3> Startup India Seed Fund Application 

    • Go to the website again and click on the ‘Apply Now’ button on the right-hand side of the homepage. 
    • Click on the ‘Apply Now’ button under the ‘For Startups’ option and log in using the username and password registered.
    • The application form will open. Put in all the details, upload the documents, and click on the ‘Submit’ button.
    • The application will be submitted for the selection of the startup.

    <H3> Selection of Startups for the Scheme 

    The Eligible Incubator will select startups for this scheme based on the following criteria:

    • Idea
    • Feasibility
    • Novelty
    • Fund Utilization Plan
    • Business Plan
    • Presentation
    • Potential Impact

    <H2> Benefits 

    • Under this scheme, up to Rs 50 lakh in financial assistance will be provided to startups at an early stage through incubators.
    • The incubator will disburse the seed fund to an eligible startup: 

           - As a grant for validation of “prototype development, proof of concept or product trials”-  Up to Rs. 20 Lakh

            - Investment for commercialization, market-entry, or scaling up through debt-linked instruments - Up to Rs. 50 Lakh

    • Once incubated, physical infrastructure, testing support, mentoring for prototype or commercialization, human resources, and legal compliances are provided to the startups, all by the incubators.‍ 
    • For eligible startups, income tax and capital gains tax exemptions are available.

    <H2> Post funding process 

    Each incubator must track specific criteria for each beneficiary startup. Every beneficiary startup must present the reports to its incubators periodically. The data is submitted to Startup India in real-time via their web dashboards and further to the EAC quarterly. Each Startup’s return on investment is also reported by the designated incubator.

    • Proof of concept
    • Prototype development
    • Progress of product development & field trials
    • Turnover of startup
    • Progress of market launch
    • Quantum of loan, angel, or VC funding raised
    • Jobs created by startup

    <H2> Frequently Asked Questions

    1. <H3> What are the documents required to apply for the Seed Fund Scheme?

    The required documents may include proof of recognition as a startup, business plan, financial projections, and any other documents specified during the application process.

    1. <H3> What are the sectors eligible for funding under the Seed Fund Scheme?

    The Seed Fund Scheme supports startups across various sectors, including technology, manufacturing, agriculture, healthcare, education, and more.

    1. <H3> Is there any equity dilution involved in receiving funding under the Seed Fund Scheme?

    No, you do not need to dilute equity to receive funding under the Seed Fund Scheme. The funding is provided as a grant rather than an investment.

    1. <H3> Can I apply for funding under the Seed Fund Scheme multiple times?

    Yes, you can apply for funding under the Seed Fund Scheme multiple times, subject to meeting the eligibility criteria and requirements. 

    <H1> National Initiative for Developing and Harnessing Innovations- Seed Support System (NIDHI-SSS)

    The National Initiative for Developing and Harnessing Innovations (NIDHI) is a comprehensive program created by the Department of Science & Technology, Government of India, through its Innovation & Entrepreneurship division. It fosters the transformation of ideas and innovations, particularly those rooted in knowledge and technology, into thriving startup ventures.

    NIDHI-Seed Support System is an initiative of the National Science & Technology Entrepreneurship Development Board (NSTEDB), Department of Science & Technology. aims to bridge a significant gap in financial support for technology-driven startups in their early stages. 

    Description

    Who is it for?

    Benefits

    To provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization, etc.

    For MSMEs and  Technology startups

    Financial Support up to Rs 100 lakhs per start-up as Seed Support

    The core concept of seed support revolves around offering financial aid to budding startups with promising ideas, innovations, and technologies. It strives to provide financial assistance to startups for proving their concept, developing prototypes, conducting product trials, entering the market, and commercializing their innovations.

    <H2> Components of NIDHI Scheme

    The key components of NIDHI are:

    1. <H3> NIDHI-GCC 

    Grand Challenges and Competitions for scouting innovations; 

    2. <H3> NIDHI-PRomotion and Acceleration of Young and Aspiring technology entrepreneurs (NIDHI-PRAYAS)

    Support from Idea to Prototype

    3. <H3> NIDHI- Entrepreneur In Residence (NIDHI-EIR)

    Support system to reduce risk

    4. Startup-NIDHI through Innovation and Entrepreneurship Development Centres (IEDCs) 

    To encourage students to promote start-ups in Institutions 

    5. <H3> Start-up Centre in collaboration with MHRD

    To drive entrepreneurship and innovation in National Institutions of Higher Learning

    6. <H3> NIDHI-Technology Business Incubator (TBI) 

    To help convert Innovations into startups 

    7. <H3> NIDHI-Accelerator 

    Fast-tracking a start-up through focused intervention 

    8. <H3> NIDHI-Seed Support System (NIDHI-SSS)

    To provide early-stage investment

    9. <H3> NIDHI Centres of Excellence (NIDHI-CoE)

    A World-class facility to help startups go global

    <H2> Focus Areas of NIDHI-SSS

    Technology-based product proposals in sectors such as agriculture, healthcare, manufacturing, engineering, IoT, biotechnology, medical devices, water, waste management, energy, climate tech, fintech etc.

    <H2> Eligibility of NIDHI-SSS

    • Must be a registered company in India with a minimum of three months of residency at the Science and Technology Entrepreneurs' Park (STEP) / Technology Business Incubators  (TBIs).
    •  Must be an Indian start-up.
    • Must have Indian promoters holding the shares of at least 51% in the incubated startup.

    Please note: This assistance is not intended for Indian subsidiaries of multinational corporations or foreign companies. However, individuals holding Overseas Citizens of India (OCI) or Persons of Indian Origin (PIO) status will be treated as Indian citizens under this scheme.

    <H2> Application procedure for Startups 

    • Website and newspaper ads are posted to signal the availability of seed support at specific incubator organizations.
    • Social media posts announce the call for applications.
    • Applicants are shortlisted based on eligibility criteria.
    • The NIDHI-SSMC makes decisions regarding the shortlisted applicants.
    • Selected applicants are chosen for funding.

    <H2> Benefits of NIDHI-SSS

    Seed support of up to INR 100 Lakhs with average financial seed funding ranging from INR 25 Lakhs

    Other assistance areas include:

    • Product development
    • Testing and trials
    • Test Marketing
    • Mentoring
    • Professional Consultancy 
    • IPR issues
    • Manpower for day-to-day operations

    <H2> Frequently Asked Questions

    <H3> 1. How does the application process for the NIDHI Seed Support Scheme work?

    The application process involves submitting a detailed proposal outlining the startup's innovative idea, project plan, budgetary requirements, and expected outcomes. Shortlisted applicants may be required to undergo further evaluation and due diligence before final selection.

    <H3> 2. Is there a limit on the number of times a startup can apply for funding under the NIDHI Seed Support Scheme?

    A startup supported once will not be eligible to apply for subsequent rounds of seed support to any STEP/TBIs.

    <H3> 3. What is the post-selection process of the NIDHI-SSS?

    The post-selection process in the NIDHI Seed Support Scheme typically involves several steps aimed at facilitating the disbursement of funds and providing ongoing support to the selected startups.

    After the seed support is recommended to an incubated startup, the terms of agreement with the incubated startup are framed by the STEP/TB, linking the progress milestones, monitoring norms, reasonable repayment, recovery provisions in case of loan, and terms of equity liquidation in case of equity holding by STEP/TBI. 

    <H1> Credit Guarantee Fund

    To improve the credit delivery system and make credit more accessible to small and medium-sized businesses, Credit Guarantee Scheme (CGS) was launched. It accelerates the access to finance for the underprivileged, making the availability of finance from conventional lenders to new-generation entrepreneurs.

    Description

    Who is it for?

    Benefits

    To improve the credit delivery system and make credit more accessible to small and medium-sized businesses

    For Micro and Small Enterprises

    The credit facilities are eligible to be covered both term loans and/or working capital for a collateral-free loan up to a limit of Rs. 200 lakh is available for individual MSE on payment of guarantee fee to the bank by the MSE.

    A credit guarantee is provided to banks and financial institutions by CGTMSE(Trust) under this scheme so that they can, in turn, lend collateral-free credit to MSEs.

    There are namely four types of Credit Guarantee schemes:

    1. <H3> Credit Guarantee Scheme for banks

     Borrowers avail of the scheme through banks.

    1. <H3> Credit Guarantee Scheme for NBFCs

    Borrowers avail of the scheme through eligible NBFCs.

    1. <H3> Sub-debt scheme

    Credit guarantee coverage for distressed MSMEs.

    1. <H3> PM Svanidhi

    Credit facilities for the street vendors.

    <H2> Eligibility 

    • New and existing Micro and Small Enterprises engaged in manufacturing, service, or retail activity, excluding Educational Institutions, Agriculture, Self Help Groups (SHGs), Training Institutions, etc.
    • All service sector enterprises under the MSMED Act are eligible for coverage.
    • Must be a “First-generation” entrepreneur.

    <H2> Application procedure for Startups 

    • Go to https://www.cgtmse.in/Home.
    • The homepage will open.
    • Click on the “Register” option seen on the homepage.
    • Enter your details and click on “Get OTP.
    • After typing in the OTP, the registration will be completed.
    • Login” to the page again. You will have to fill in the required information such as GST details, Bank Account details, and ITR.
    • Click on “Submit” to avail the benefits under this scheme.
    • Download the financial report, calculate the guarantee, etc, if needed.

    <H2> Benefits of the Scheme

    • The guarantee cover available under the scheme is to the extent of 75 percent of the sanctioned amount of the credit facility.
    • Credit or loans in the northeast region, UT of J&K, and UT of Ladakh for credit facilities up to Rs 50 lakh, are covered by an 80 percent guarantee.
    • For micro and small businesses operated or owned by women, as well as SC/ST individuals, the guarantee cover stands at 85%.
    • For up to 5 lakh micro-enterprise loans, the guarantee cover stands at 85%.
    • The credit is without any collateral or third-party guarantees. 

    The guarantee will commence from the e-date of payment of the guarantee fee. It will run for the agreed term credit tenure in the event of term loans / composite loans and for a period of 5 years in the case of working capital facilities only granted to borrowers or for such period as the Guarantee Trust may specify in this regard.

    <H2> Frequently Asked Questions

    <H3> 1. What types of loans are covered under the Credit Guarantee Fund?

    The Credit Guarantee Fund may cover various types of loans, including term loans, working capital loans, equipment financing, and other credit facilities extended by participating lending institutions to eligible borrowers.

    <H3> 2. How does the Credit Guarantee Fund work?

    Under the Credit Guarantee Fund scheme, lending institutions extend loans to eligible borrowers without requiring traditional collateral. Instead, the loans are backed by a guarantee provided by the Credit Guarantee Fund, which covers a certain percentage of the loan amount in case of default.

    <H3> 3. Are there any fees associated with accessing credit under the Credit Guarantee Fund?

    Borrowers may be required to pay certain fees, such as guarantee fees or processing charges, to avail of credit under the Credit Guarantee Fund scheme. The specific fees and charges may vary depending on the terms and conditions of the scheme.

    <H3> 4. Can borrowers avail of multiple loans under the Credit Guarantee Fund scheme?

    Yes, borrowers may be eligible to avail of multiple loans under the Credit Guarantee Fund scheme, subject to the approval of lending institutions and compliance with the fund's guidelines.

    <H1> Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

    The SIP-EIT program offers financial assistance to MSMEs and technology startups in filing international patents. It also encourages innovation, recognizes the value and capabilities of global IP, and captures growth opportunities in the ICTE sector.’

    Description

    Who is it for?

    Benefits

    To foster innovation by providing financial support to MSMEs and Technology Startup units for international patent filing

    For MSMEs and  Technology startups

    A maximum reimbursement of Rs. 15 Lakhs per invention or 50% of the total charges incurred in filing and processing a patent application, whichever is lesser

    The primary objective of the scheme is to safeguard knowledge and innovative products from misuse. Since its inception, the scheme has revealed numerous new capabilities and received government backing. The SIP-EIT scheme aims to facilitate approximately 200 international ICT patent applications.

    <H2> Eligibility 

    • Must be registered under the Government of India's MSME Development Act of 2006.
    • Must be a company registered under the Companies Act of the Government of India and must meet the investment restrictions in plant and machinery or equipment set forth in the Government of India's MSME Development Act 2006.
    • Must be a technology incubation enterprise or a startup registered as a company and located in an incubation center or park (in this case, a certification from the incubation center or park is required).
    • Must be an STP Unit that has been approved.
    • The invention must be in the field of electronics or information and communication technologies.

    <H2> List Of Important Documents Required

    1. Scanned copy of MSME Registration Certificate (For MSME Units)
    2. Scanned copy of Company Registration Certificate  (For Companies)
    3. Scanned copy of STP Registration (For STP Units)
    4. Scanned copy of the Registration Certificate issued by a competent authority and a certification from the incubation Centre/Park (For Technology Incubation Enterprise/Startup)
    5. Scanned copy of the last audited Balance Sheet
    6. Copy of product brochure, if any
    7. Copy of latest Annual Report, if any
    8. Copy of official filing receipt (OFR) with the Indian Patent Office 
    9. Copy of waiver under section 39 of the Indian Patent Act (Outside India)
    10. Copy of proof of the application under  PCT/ Paris Convention or Direct International Filing
    11. Copy of technical writeup of invention as per the format of technical writeup 
    12. Patent search report 
    13. Scanned copy of Details for transfer of e-payments as per the format 
    14. Scanned copy of the Declaration form duly signed and sealed as per the format
    15. A statement by the auditor of the enterprise that they fulfill the criteria of investment in plant and machinery or investment in capital equipment (as the case may be) as stipulated in the MSMED Act 2006. 

    <H2> Application procedure for Startups 

    • Go to http://www.ict-ipr.in/sipeit/login.
    • Create a User account by logging in after filling out all the details.
    • Once “Login” is created, one can apply online for the scheme by submitting the required documents.

    <H2> Selection OR Acceptance of Startups 

    The acceptance of startups under this scheme depends on the following criteria:

    • For a particular invention, there can be one application for foreign filling.
    • An Indian patent attorney firm with at least five years of experience in handling international patent applications handles and processes patent applications. 
    • Only five applications per financial year will be considered for reimbursement from a single applicant.
    • The applicant should have already filed a patent application with the complete specification for the said invention with the Indian Patent Office.
    • International patent filing options include the PCT route, the Paris Convention route, or filing directly in a foreign country of the innovator's choice.

    <H2> Benefits 

    • This scheme provides financial support for the International filing of patents at different stages, including expenses in filing and processing.
    • The maximum amount reimbursed per innovation shall be Rs 15 lakhs or 50% of the total expenditures paid in filing and processing a patent application up to grant, whichever is less.
    • Under the scheme, financial support is also provided to Education Institutes, Meity societies, etc., for organizing seminars & workshops on IPR awareness.

    <H2> Frequently Asked Questions

    <H3> 1. What types of intellectual property are covered under the SIP-EIT scheme?

    The scheme primarily focuses on supporting international patent applications related to innovations in the Electronics & Information Technology sector. This may include inventions, designs, processes, and other forms of intellectual property.

    <H3> 2. Can individuals or organizations from outside India apply for support under the SIP-EIT scheme?

    No, the SIP-EIT scheme is specifically designed to support Indian innovators, startups, MSMEs, and other entities engaged in research and development activities within India.

    Promoting Innovations in Individuals, Startups and MSMEs (PRISM)

    Promoting Innovations in Individuals, Startups, and MSMEs (PRISM) is a program that offers grants, technical support, and mentorship to individual innovators, including students, guiding them through each stage of incubating their ideas into new enterprises. 

    Description

    Who is it for?

    Benefits

    To provide grants, technical advice, and mentorship to individual innovators, guiding them through the various stages of incubating their ideas until they transform into viable enterprises

    For Innovators in the technology area

    Upto INR 2,00,000 or 90% of the approved project cost for prototype or model development 

    This grant-aid support is implemented in phases:

    • Phase-1

    • Category 1: For Proof of concept/prototype/models

    • Category 2:  For fabrication of working model/ process know-how/testing & trail/ patenting/ technology transfer, etc.

    • Phase-2

    For scaling up technology-based innovations, including patenting/design registration/trademark registry/ technology transfer to develop a marketable product/process towards enterprise creation.

    <H2> Eligibility 

    For PRISM Phase-1:

    Any Indian citizen, including student innovators, can avail support to develop their novel ideas into demonstrable models/prototypes.

    For PRISM Phase-2:

    PRISM innovators who have demonstrated success or innovators who have proven their concepts with assistance from other government institutions or agencies.

    <H2> Eligible Sectors for the Scheme

    The proposals are encouraged to focus on sectors such as 

    • Green Technology
    • Clean Energy
    • Industrial Smart Materials
    • Waste to Wealth
    • Affordable Healthcare
    • Water & Sewage Management
    • Other technology or knowledge-intensive areas.

    <H2> Application procedure for Startups 

    • Submit your project proposal following the prescribed format to the nearest TePP Outreach cum Cluster Innovation Centres (TOCICs). Here’s a list of TOCICs in India
    • Once received, TOCIC coordinators will review proposals for completeness and forward them further.
    • Domain Knowledge Experts associated with TOCIC will then assess the proposals.
    • Evaluated proposals are forwarded to DSIR for further action and reviewed by the PRISM Advisory and Screening Committee (PASC) for recommendation.
    • Upon Department approval, "Terms & Conditions" must be signed before grants-in-aid release.
    • Initial fund release is based on project milestones and PASC recommendations. Subsequent releases depend on project progress evaluated by the Project Review Committee (PRC).
    • TOCIC and network partners, along with technical experts, will monitor approved projects.
    • TOCIC will provide project status reports to DSIR every 3 months, while PRCs will review project progress at least once every 9 months.
    • Upon successful project completion, the DSIR will accept the project completion report based on PRC recommendation.

    <H2> Benefits of the PRISM Scheme

    The PRISM Scheme includes various phases designed to support innovators in different stages of their project development. Each phase may involve different levels of support, resources, and guidance tailored to the specific needs of innovators. 

    For Phase-1:

    • Category 1: Maximum support within this category is capped at INR 2,00,000 or 90% of the approved project cost, whichever is less.
    • Category 2: Maximum support is limited to 20.00 lakh or 90% of the total project cost, whichever is lower. 

    For Phase-2:

    • For projects with costs ranging from INR 5 Lakhs to INR 35 Lakhs, maximum support of either INR 20 Lakhs or 90% of the total project cost (whichever is lower) is provided.

    Please note: If the project beneficiaries abandon the project, innovators must reimburse the funding disbursed, along with a 12% interest rate, to the DSIR.

    <H2> Frequently Asked Questions

    1. <H3> What is the objective of the PRISM Scheme?

    The PRISM Scheme aims to encourage innovation, research, and development activities among individuals, startups, and MSMEs by providing financial support and fostering a conducive ecosystem for growth and experimentation.

    1. <H3> Can individuals or only organizations apply for the PRISM Scheme?

    Both individuals and organizations, including startups and MSMEs, are eligible to apply for the PRISM Scheme as long as they meet the eligibility criteria outlined by the scheme.

    1. <H3> Are there any specific criteria for project selection under the PRISM Scheme?

    Projects are selected based on criteria such as innovation quotient, technical feasibility, market potential, scalability, and socio-economic impact.

    1. <H3> Do projects funded under the PRISM Scheme get evaluated later?

    Projects funded under the PRISM Scheme are subject to regular monitoring and evaluation to ensure compliance with project milestones, utilization of funds, and achievement of desired outcomes.

    <H2> Women Entrepreneurship Platform (WEP)

    The Women Entrepreneurship Platform (WEP) is a NITI Aayog initiative that seeks to bring together women from various parts of the country through a unified access portal to help them realize their entrepreneurial aspirations.

    Description

    Who is it for?

    Benefits

    To promote women entrepreneurship in the country by empowering them through financial aid and mentoring

    For Women Entrepreneurs

    Apart from providing incubation & acceleration, this scheme offers mentorship and financial and marketing assistance.

     It is built on three foundation pillars: Iccha Shakti, Karma Shakti, and Gyaan Shakti.

    <H3> Iccha Shakti 

    Encourages aspiring entrepreneurs to kickstart their business ventures.

    <H3> Gyaan Shakti 

    Offers knowledge and ecosystem support to women entrepreneurs, nurturing entrepreneurship.

    <H3> Karma Shakti 

    Provides practical assistance to entrepreneurs in establishing and expanding their businesses.

    It specifically provides access to programs for 

    • Incubation and acceleration
    • Entrepreneurship skilling and mentorship
    • Marketing assistance
    • Funding and financial assistance
    • Compliance and tax assistance
    • Community and networking

    <H2> Eligibility 

    Any woman entrepreneur with an established or new startup or just a business idea can benefit from this scheme.

    <H2> Application procedure for Startups 

    1. Visit https://wep.gov.in/.
    2. Click on the “Register” button on the homepage. Following this, a registration form will appear on the screen.
    3. Fill in all the details and click on the “Register” button at the bottom of the page. 
    4. After completing registration, a page will appear asking for “Areas of Interest” and relevant fields.
    5. Fill in all the Personal Information, Business Information, and Educational information. Keep in mind that the fields might vary depending on the area of interest you are choosing. 
    6. Successful submission of details leads you to become a member of the WEP and grants you access to several benefits.

    <H2> Benefits of the WEP 

    WEP actively hosts a wide range of events as a platform, providing resources and promoting entrepreneurial communities.

    • It provides monetary assistance, including seed capital, growth capital, line of credit( LOC), and non-credit support.
    • Promotion of offline initiatives and outreach programs by partnering with other organizations.
    • Incubation and acceleration support to startups founded or co-founded by women entrepreneurs registered with the program.
    • Identification of skill gaps and providing online/offline training on these aspects.
    • Marketing and networking support to early-stage or established entities
    • Compliance services to registered users, which provides them with the essential tools to adhere to legal compliances, perform registrations, furnish accounts, make loan applications, provide license counseling, and so on.
    • A like-minded community to understand the true spirit of entrepreneurship and the way forward.

    To provide better support, WEP has tied up with some Fortune companies like CRISIL, Facebook, SIDBI,  NASSCOM, DICE, FICCI, Mann Foundations, Shopclues, CII, and many others. The fortunes will play a key role in developing different skill sets important for a robust entrepreneurial ecosystem.

    <H2> Frequently Asked Questions

    <H3> 1. What are the objectives of the Women Entrepreneurship Platform?

    The primary objectives of the Women Entrepreneurship Platform include empowering women entrepreneurs, facilitating networking and collaboration, providing access to resources and support, and promoting innovation and sustainability in women-led businesses.

    <H3> 2. Is there any cost associated with joining the WEP?

    No, there is typically no cost associated with joining the WEP. It is a free initiative aimed at supporting and promoting women entrepreneurship in India.

    <H3> 3. Are there any sector limits on the WEP?

    No, the WEP is open to women entrepreneurs from all industries and sectors, including technology, manufacturing, agriculture, healthcare, retail, and services.

    <H1> Pradhan Mantri Mudra Yojana (PMMY)

    The PMMY scheme launched in 2015 aims to provide MUDRA Loans to small and micro enterprises through various commercial banks, RRBs, SFBs, NBFCs, and Cooperative Banks. 

    Description

    Who is it for?

    Benefits

    To loan funds in the form of MUDRA for promoting MSMEs

    For small-scale businesses & MSMEs

    Business loans ranging from Rs.50,000 to Rs.10 lakh can be applied under this scheme, which is divided into three categories: Sishu, Kishor, and Tarun.

    The loan range may vary depending on growth, development, and funding needs. The MUDRA loan can be categorized into

    1. Sishu - Up to Rs. 50,000
    2. Kishore - Rs. 50,000 to 5 Lakh
    3. Tarun - Rs. 5 Lakh to 10 Lakh

    <H2> Eligibility 

    • Must have business plans for service sector activities or trading or manufacturing activities.
    • In the case of an individual applicant, the age range must be between 18 and 65 years. 
    • Must be a non-corporate and non-farm small and micro-enterprise. 

    <H2> Documents Required for the PMMY Scheme

    1. Proof of identity 

    Self-attested copy of Voter's ID card/Driving Licence/PAN Card/Aadhaar
    Card/Passport/Photo IDs issued by Govt. authority etc.

    1. Proof of Residence

    Recent telephone bill/electricity bill/property tax receipt (not older than 2 months) / Voter's ID card / Aadhaar Card / Passport of Individual / Proprietor/Partners/Bank passbook or latest account statement duly attested by Bank officials/Domicile certificate/certificate issued by Govt. authority/Local panchayat/Municipality etc.

    1. Applicant's Recent Photograph (2 copies) 6 months or older.
    2. Proof of Identity/Address of the Business

    Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity, and address of the business unit, if any

    Other relevant documents, like proof of category, quotation, etc., are also required during the application process. 

    <H2> Application procedure 

    If you are eligible, applying for a MUDRA loan is relatively easy and can be done both online & offline. 

    <H3> Online 

    • Visit the official website of the PMMY-authorized financial institution from which you wish to avail of the Mudra loan.
    • Download the relevant form depending on the type of loan (Sishu, Kishore, and Tarun).
    • Fill out all the personal and business details and then “Submit” the form. 
    • Once received, the application form is verified and processed accordingly. Following the verification, the loan amount is approved and disbursed.
    • The amount can be withdrawn with the help of the assigned MUDRA card.

    <H3> Offline 

    • Visit a PMMY-authorized bank or NBFC of your choice.
    • Fill out the MUDRA loan application form with the required details.
    • Submit the application form with a self-written business plan and other documents to substantiate those details.
    • After successful document verification, the loan will get approved, and the desired amount will be credited.
    • The loan amount can be withdrawn with the help of a MUDRA card issued after the loan approval.

    <H2> Benefits of the PMMY Scheme

    • MUDRA loans can be taken for small amounts at affordable interest rates; also, the credit guarantee is borne by the Government.
    • This scheme could be availed without any collateral or security.
    • The Mudra loan scheme in collaboration with the “Make In India” campaign, helps in fostering innovation, facilitating investment, and improving skill development.
    • Women Borrowers can avail this scheme with discounted interest rates.
    • Relief of up to 1500 Crore will be provided to the Borrowers as Interest Subsidy under the Mudra Shishu Category.

    <H2> Achievements Under PMMY Scheme

    Here’s a table to highlight the achievements under the PMMY scheme in the last 3 years.

    No. of PMMY loans sanctioned

    Amount sanctioned

    FY 23-24

    66777013

    INR 541012.86 Crores

    FY 22-23

    62310598

    INR 456537. 98 Crores

    FY 21-22

    53795526

    INR 339110.35 Crores

    <H2> Frequently Asked Questions

    <H3> 1. Who is eligible to apply for the PMMY Scheme?

    Individuals, including entrepreneurs, micro-enterprises, and small businesses in the non-corporate, non-farm sector, are eligible to apply for loans under the PMMY Scheme.

    <H3> 2. Is there any collateral required for loans under the PMMY Scheme?

    Loans under the PMMY Scheme are collateral-free, meaning borrowers do not need to provide any security or collateral to avail of the loans, making them accessible to a wider segment of the population.

    <H3> 3. Can existing businesses apply for loans under the PMMY Scheme, or is it only for new startups?

    The PMMY Scheme is open to both existing businesses and new startups. As long as the business falls under the micro-enterprise or small business category and meets the eligibility criteria, it can apply for a loan under the scheme.

    <H3> 4. What is the role of the Micro Units Development and Refinance Agency (MUDRA) in implementing the PMMY Scheme?

    The Micro Units Development and Refinance Agency (MUDRA) acts as the nodal agency for the implementation of the PMMY Scheme. It works in collaboration with various financial institutions to ensure the effective disbursal of loans and monitoring of the scheme's progress.

    SAMRIDH or Startup Accelerators of MeitY for Product Innovation, Development, and Growth, launched by the Ministry of Electronics and IT, aims to provide funding and acceleration to startups, predominantly software startups. 

    Description

    Who is it for?

    Benefits

    To provide funding support to the tech and software startups with proof of concept & innovations.

    For Tech & Software startups

    Under this scheme, startups can get funding of up to Rs. 40 lakhs based on current valuation and growth stage through selected accelerators.

    The investment is extensively for brilliant solutions and proof of concepts through selected accelerators. The selected accelerators are responsible for providing a customized acceleration program for 300 selected startups.

    ‍<H2> Features of SAMRIDH Scheme

    Image source: https://msh.meity.gov.in/schemes/samridh 

    1. The SAMRIDH scheme provides your startup which already has brilliant solutions and proof of concept for their product, better facilities to enhance the product using innovative technologies for the market with a solid business plan.
    2. The scheme provides a platform to enhance your products and secure investment for scaling your business. 
    3. Once your startup gains traction, there is a gap in accessing the growth stage funding to scale up the operations,and the scheme is filling up this gap for startups. 
    4. The scheme supports existing and upcoming Accelerators to select and accelerate potential IT-based startups to scale to solve India's problems and create positive social impact. 

    <H2> Eligibility for SAMRIDH Scheme

    <H3> For Startups 

    • Must be recognized by DPIIT.
    • Must be in the Early-growth stage.
    • The product of the startup must be software-based.

    <H3> For Accelerators

    • Must have operations in India.
    • Must have been in the business of incubation for more than three years and supported more than 50 startups.
    • Must have the required infrastructure and targeted acceleration programs.

    <H2> Application procedure for Startups 

    The application procedure primarily comprises the following steps:

    • Visit https://meitystartuphub.in.
    • On the homepage, click on “Register” under the Startup section. 
    • The registration page will appear. Fill in all the requisite details and click on the “Submit” button. 
    • Following registration, one can "log in" to the page for further access by filling in the username and password.

    <H2> Benefits of SAMRIDH

    • This scheme provides a platform for product development and business scaling in terms of investment. 
    • To provide customer connect, investor connect, and international connect services.
    • Up to Rs 40 lakh will be provided to the startups according to their current valuation and growth stage through accelerators..
    • Customized acceleration programs for startups and provided product and capacity enhancement services.

    <H2> Post-Selection Process for SAMRIDH Scheme

    The ​​MeitY SAMRIDH Scheme will be implemented through the MeitY Startup Hub (MSH). The selected Accelerator will be responsible for developing personalized acceleration programmes, and the budget for each startup is Rs. 2 lakh.

    The services include- Co-learning, networking, expert diagnosis, and negotiation of investment funding from Angel Investors.  A maximum of 10 businesses and a minimum of 5 startups working in the sphere of software products can be helped by a shortlisted accelerator.

    MSH will take equity in startups for the government's contribution via Promissory/SAFE Note, the same as Accelerator, which will be utilized to sustain the program.The startup's exit may be executed by MSH or its appointed entity holding the company's equity, subject to approval from SMC. Biannual assessments of startups within the portfolio will be conducted, and the resulting reports will inform decisions regarding exiting from the startup.

    <H2> Frequently Asked Questions

    <H3> 1. What documents are required to apply for the SAMRIDH Scheme?

    The documentation requirements may vary depending on the lending institution, but generally, applicants need to provide identity proof, address proof, income proof, and business-related documents.

    <H3> 2.  What are the key benefits of the SAMRIDH Scheme?

    The key benefits of the SAMRIDH Scheme include financial support, access to investment opportunities, and promotion of entrepreneurship with the help of the accelerators. 

    <H3> 3. Which accelerators are presently part of the Samridh Scheme?

    Here is a list of accelerators participating in the Samridh Scheme: Link.

    Starting a business comes with its fair share of challenges. Fortunately, the Indian government has recognized the importance of startups in driving innovation and economic growth, and they've rolled out a range of initiatives to support budding entrepreneurs like you.

    In this blog, we're going to take you on a guided tour of these government schemes, offering insights into what they offer, who's eligible, and how they can benefit your startup. 

    <H2> Why are Government Schemes important for Startups?

    Government support plays a pivotal role in nurturing and sustaining startups for several reasons:

    1. <H3> Access to Funding

    Government-backed schemes and initiatives provide access to funding and financial assistance, which is crucial for startups, especially in their early stages of development. 

    These funds can help cover initial capital expenditures, research and development costs, and other operational expenses.

    1. <H3> Regulatory Support

    Governments often create favorable regulatory environments and offer incentives such as tax breaks, exemptions, and subsidies to encourage entrepreneurship and innovation. 

    1. <H3> Infrastructure Development

    Government investment in infrastructure development, including technology parks, startup incubators, and innovation hubs, provides startups with access to essential resources, facilities, and networking opportunities. 

    1. <H3> Skill Development and Training

    Government-sponsored programs and initiatives focus on skill development, entrepreneurship training, and capacity-building for aspiring entrepreneurs. By imparting essential business skills, knowledge, and mentorship, governments empower startups to navigate challenges effectively.

    1. <H3> Market Access and Promotion

    Government initiatives aim to facilitate market access for startups by promoting domestic and international trade, fostering industry partnerships, and facilitating market linkages through trade fairs, exhibitions, and business delegations.

    1. <H3> Innovation and Research Support

    Governments incentivize research and innovation through grants, subsidies, and funding programs aimed at supporting startups engaged in technology development, product innovation, and scientific research.

    1. <H3> Job Creation and Economic Growth

    Government support for startups leads to the creation of new job opportunities, stimulates economic activity, and contributes to GDP growth by fostering entrepreneurship, innovation, and productivity.

    <H2> List of Government Schemes for Startups in India

    Name of the Scheme

    Description

    Who is it for?

    Benefits

    Startup India Seed Fund Scheme

    To provide monetary support for proof of concept, prototype development, product trials, market, and commercialization

    Startups using Technology as their core product or service

    Under this scheme, Financial assistance up to Rs. 50 lakh will be provided to startups at an early stage through incubators

    Women Entrepreneurship Platform (WEP)

    To promote women entrepreneurship in the country by empowering them through financial aid and mentoring

    For Women Entrepreneurs

    Apart from providing incubation & acceleration, this scheme offers mentorship and financial and marketing assistance.

    Pradhan Mantri Mudra Yojana (PMMY)

    To loan funds in the form of MUDRA for promoting MSMEs

    For small-scale businesses & MSMEs

    Business loans ranging from Rs.50,000 to Rs.10 lakh can be applied under this scheme, which is divided into three categories: Sishu, Kishor, and Tarun.

    Promoting Innovations in Individuals, Start-ups and MSMEs (PRISM)

    To provide grants, technical advice, and mentorship to individual innovators, guiding them through the various stages of incubating their ideas until they transform into viable enterprises

    For Innovators in the technology area

    Upto INR 2,00,000 or 90% of the approved project cost for prototype or model development 

    Support for International Patent Protection in Electronics & Information Technology 

    (SIP-EIT)

    To foster innovation by providing financial support to MSMEs and Technology Startup units for international patent filing

    For MSMEs and  Technology startups

    A maximum reimbursement of Rs. 15 Lakhs per invention or 50% of the total charges incurred in filing and processing a patent application, whichever is lesser

    Credit Guarantee Fund 

    To improve the credit delivery system and make credit more accessible to small and medium-sized businesses

    For Micro and Small Enterprises

    Collateral-free loans up to a limit of Rs. 200 lakh are available for individual MSE 

    Startup Accelerators of MeitY for Product Innovation, Development, and Growth (SAMRIDH)

    To provide funding support to the tech and software startups with proof of concept & innovations.

    For Tech & Software startups

    Under this scheme, startups can get funding of up to Rs. 40 lakhs based on current valuation and growth stage through selected accelerators.

    Nidhi Seed Support System (NIDHI-SSS)

    To provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization, etc.

    For MSMEs and  Technology startups

    Financial Support up to Rs 100 lakhs per start-up as Seed Support

    To conclude, the government of India has been actively participating in boosting the startup ecosystem, and numerous initiatives are launched each financial year to contribute to the growth of MSMEs. For detailed features, eligibility, process and benefits, visit the respective page for schemes and if you feel any of these schemes can give wings to your startup dreams, you can go through the given details and apply. 

    Starting a business in India? Fantastic! Now, let's tackle the first big decision – registering your business. However, the dilemma often arises when choosing the appropriate legal structure. 

    Private Limited Companies and Limited Liability Partnerships (LLPs) emerge as the two most prevalent options. In this blog, we are highlighting the distinctions between these legal structures, providing insights that can empower you to make an informed decision.

    <CTA>

    <H2> Difference between Private Limited and Limited Liability Partnerships 

    Private Limited Companies and LLPs are two distinct forms of business structures, each with its own set of characteristics, advantages, and disadvantages. Here's a brief comparison between the two:

    Private Limited Company

    Limited Liability Partnership

    Governing Act

    Governed by the Companies Act

    Governed by the Limited Liability Partnerships Act

    Suitable For 

    Financial Services, Tech Startups, Medium Enterprises

    Consultancy firms, Professional Services

    Shareholders/ Partners

    Minimum- 2

    Maximum- 200

    Minimum- 2

    Maximum- Unlimited

    Minimum Capital Requirement

    No minimum capital requirement, but it is often advised to set the authorized capital at ₹1,00,000 (One Lakh) INR

    No minimum capital requirement, but it is often advisable to consider an initial capital of ₹10,000 INR

    Tax Rates

    The basic tax rate, excluding Surcharge and Cess-  25%

    The standard fixed rate-  30% on their generated earnings.

    Fundraising 

    Easier to raise funds from Investors 

    Raising funds can be challenging

    Transfer of Shares

    Shares can be easily transferred by amending AOA

    Transfer of partnership rights may require the consent of other partners and is generally more complex

    ESOPs

    Can issue ESOPs to the Employees

    Unable to issue ESOPs to the Employees

    Agreements

    Duties, Responsibilities, and other basic clauses outlined in MOA and AOA

    Duties, Responsibilities, and other basic clauses outlined in the LLP Agreement

    Compliances

    • More compliance costs
    • Mandatory 4 Board Meetings
    • Mandatory Statutory Audits
    • Mandatory filings include Annual financial statements in form AOC-4 and annual returns in Form MGT-7, etc.
    • Less Compliance Costs
    • No mandatory Board Meetings
    • Statutory Audits are not required if turnover is less than 40 Lakhs, or capital contribution is less than 25 Lakhs.
    • Mandatory filings include Annual financial statements in Form 8 and annual returns in Form 11.

    Dissolution

    More complex

    Can be initiated by filing STK-2 form

    Less Complex 

    Can be initiated by filing the Form 24

    While the differences between LLPs and Private Limited Companies are numerous, they share similarities in key aspects:

    1. Limited Liability
    2. Separate Legal Identity
    3. Registration Process with the MCA
    4. Perpetual Succession

    Let’s understand the key features and registration process in detail for both Private limited companies and LLPs. 

    <H1> Private Limited Company 

    A Private Limited Company is a type of business structure that is characterized by limited liability and a separate legal entity. Listing down some key features of a Private Limited Company below:

    1. Limited Liability: The liability of Shareholders is limited. Personal assets are generally protected from business debts.
    2. Separate Legal Entity: A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.
    3. Ownership: Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.
    4. Management: Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.
    5. Number of Shareholders: Requires a minimum of two shareholders and can have a maximum of 200 shareholders.
    6. Regulation and Compliance: Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings, and maintaining statutory records.
    7. Investment and Funding: Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

    <H3> Private Limited Company Registration

    The Ministry of Corporate Affairs (MCA) has introduced a streamlined process for incorporating companies called Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), consisting of two parts: Part A and Part B.

    1. Acquire a Digital Signature Certificate (DSC):
    • A Digital Signature Certificate (DSC) is a digital method of verifying or attesting documents.
    • It is typically issued with one or two-year validity and is mandatory for all witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).
    • Class 2 or 3 DSCs can be obtained through listed Government Certifying Agencies (CAs).
    1. Apply for Name Approval using SPICe+ Part A:
    • Part A facilitates 'Name Reservation' with two proposed names and one re-submission (RSUB).
    • In case of name rejection due to various reasons, a re-filing with the specified fee is required.

    Note: Simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is possible, but only one name can be reserved.

    1. Apply for Company Registration using SPICe+ Part B:

    After name approval, Part B completes the registration process, including:

    • Application for allotment of Director Identification Number (DIN)
    • Incorporation of the new company
    • Submission of e-MoA (INC-33) and e-AoA (INC-34)
    • Application for PAN and TAN (mandatory)
    • Application for EPFO registration (mandatory)
    • Application for ESIC registration (mandatory)
    • Application for Professional tax registration (only for Maharashtra)

    The entered information in SPICe+ Parts A and B is automatically transferred to associated forms like AGILE-PRO, eAoA, eMoA, URC1, and INC-9, as applicable.

    1. Open a Bank Account:

    Open a current account for your company to facilitate seamless financial transactions and business operations, handling various aspects such as receiving payments, making supplier payments, and managing payroll.

    1. File for the Commencement of Business Certificate:

    The Commencement of Business Certificate, filed through Form INC-20A within 180 days of incorporation, is a declaration by the Director of the Company submitted to the Registrar of Companies.

    <CTA>

    After the SPICe+ Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

    This certificate includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

    Example of CIN: U72200KA2013PTC097389

    Read more about what each letter in a CIN signifies here

    <H2> Limited Liability Partnerships 

    A Limited Liability Partnership (LLP) is a business structure that combines features of both a traditional partnership and a limited company. Limited Liability Partnerships are often chosen by professional services firms, small businesses, and ventures where the partners want the flexibility of a partnership along with the protection of limited liability. 

    Some key characteristics of a Limited Liability Partnership are:

    1. Limited Liability: Similar to a private limited company, partners in an LLP have limited liability. 
    2. Separate Legal Entity: An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.
    3. Ownership: Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.
    4. Management: Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.
    5. Number of Partners: Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.
    6. Regulation and Compliance: Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.
    7. Flexibility: Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

    <H3> Limited Liability Partnerships Registration

    Here's a simplified guide on the steps for Limited Liability Partnership (LLP) registration:

    1. Obtain a Digital Signature Certificate from Government Certifying Agencies with one or two-year validity.
    2. Reserve the LLP's name using the LLP-RUN form. 
    3. Complete the FiLLiP (Form for Incorporation of Limited Liability Partnership) and submit it to the Registrar. Alongside FiLLiP, submit the Subscriber sheet and Partner's consent (Form 9) as additional documentation.
    4. File the LLP Agreement using Form 3 on the MCA portal within 30 days of LLP registration.

    After the FiLLiP Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, a crucial legal document confirming the successful registration of your company.

    This certificate includes vital information such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and more.

    Example of LLPIN: AAA-1234

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    <H2> Company Registration with Razorpay Rize

    Experience a hassle-free, 100% online business registration process with Razorpay Rize, featuring the lowest professional fees and absolutely no hidden charges. Explore the diverse range of services tailored to suit the needs of both startups and established businesses.

    Our package includes:

    • Company Name Registration
    • 2 Digital Signature Certificates (DSCs)
    • 2 Directors’ Identification Numbers (DINs)
    • Certificate of Incorporation(COI)
    • MoA & AoA [Applicable for Private Limited Companies and OPCs]
    • LLP Agreement [Applicable for LLPs]
    • Company PAN & TAN

    *Prices and documents can differ based on the company type.

    <H2> Which company type should you register your business with?

    Before proceeding with the registration of either an LLP or a company, it is crucial to evaluate the following factors carefully.

    • Consider the nature and size of your business

    If you operate a small business with a limited workforce, opting for LLP registration might be more favorable, given the relatively lighter compliance requirements compared to a company. On the other hand, for larger businesses with substantial employee numbers and capital needs, registering as a company provides greater flexibility in raising capital.

    • Fundraising requirements 

    If your goal is to raise funds through equity, choosing a company structure is imperative. However, if your fundraising needs are more straightforward, the LLP structure may be a more suitable option. 

    • Tax rates

    It's essential to compare the tax rates applicable to both company and LLP structures, as there can be significant differences. Opt for the structure that aligns with your financial goals based on total income or turnover.

    • Personal liability protection 

    While an LLP offers limited liability protection, a company structure treats the company as a distinct legal entity, safeguarding shareholders' personal assets. 

    Ultimately, the choice between a company structure and an LLP structure hinges on the unique characteristics of your business, including its nature, size, and capital requirements.

    <H2> Find Your Ideal Company Type

    If you still need more help deciding which company type to register with, don't worry! We’ve got you covered with our latest tool - "Know Your Company Type."

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    Private Limited Company and One Person Company (OPC) are both regulated by the Companies Act and share many similarities. However, it's important to understand their differences before choosing the right legal structure for your business. 

    In this blog, we'll discuss the distinctions between Private Limited Company and OPC in detail, helping you make an informed decision when registering your business. 

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    <H2> Difference between Private Limited and One Person Companies 

    Although we will explore each legal structure in the upcoming sections, let's currently delve into a comparative analysis between these two entities.

    Private Limited Company

    One Person Company

    Suitable for

    Financial Services, Tech Startups, Medium Enterprises

    Franchises, Retail Stores, Small Businesses

    Shareholders

    Minimum- 2

    Maximum- 200

    Minimum- 1

    Maximum- 1

    Nominee

    Not required

    One Nominee mandatory

    Minimum Capital Requirement

    No minimum capital requirement

    No minimum paid-up capital requirement exists. However, the minimum authorized capital required is Rs. 1,00,000 (One Lakh)

    Tax Rates

    The basic tax rate, excluding Surcharge and Cess, is 25%

    The applicable Tax rate to the OPC would be 25%, excluding cess and surcharge

    Fundraising 

    Multiple options for Fundraising

    Limited options for Fundraising

    ESOPs

    Can issue ESOPs to the Employees

    Unable to issue ESOPs to the Employees

    DPIIT Recognition

    Eligible for DPIIT recognition

    Ineligible for DPIIT recognition

    Transfer of Shares

    Shares can be easily transferred by amending AOA

    Transfer of shares isn’t possible; it can only be done in case of transfer of ownership

    Compliances

    • More compliance costs
    • Mandatory 4 Board Meetings
    • No mandatory audits till a specified threshold limit
    • Less Compliance Costs
    • Minimum 2 Board Meetings
    • Mandatory Audits

    Foreign Directors

    NRIs and Foreign Nationals can be Directors

    No foreign directors are allowed

    Foreign Direct Investment

    Eligible through Automatic route

    Not eligible for FDI 

    Mandatory

    Conversion

    No mandatory conversion 

    If annual turnover exceeds Rs. 2 Crores or paid-up capital exceeds Rs. 50 lakhs, then mandatory conversion into a private limited company

    While we have provided some context on the differences between a private limited company and an OPC, let's break down their features and registration process in detail. This will help you figure out which one suits your business needs best.

    <H2> Private Limited Company 

    In India, a Private Limited Company is the most prevalent form of company registration, regulated by the Companies Act of 2013 under the Ministry of Corporate Affairs (MCA). Startups and businesses aiming for growth & stability often prefer this structure due to its flexible ownership and effective management. 

    There are multiple features that collectively make a Private Limited Company an attractive and versatile business structure, combining limited liability protection and growth opportunities. Some key features include:

    1. Limited Liability:

    The liability of the Shareholders is limited to the amount invested in the company, protecting personal assets from business debts and liabilities.

    1. Separate Legal Entity:

    A Private Limited Company is considered a distinct legal entity from its owners, providing legal recognition and enabling it to enter contracts, sue, or be sued in its own name.

    1. Perpetual Succession:

    The company continues to exist despite changes in ownership, ensuring continuity even if shareholders or directors change.

    1. Fundraising Opportunities:

    Private Limited Companies can issue shares, making it easier to attract investors and raise capital for business expansion.

    1. Transferability of Shares:

    Shares can be transferred to others, facilitating the ease of ownership transfer and potential exit strategies for shareholders.

    <H3> Private Limited Company Registration

    The Ministry of Corporate Affairs (MCA) has implemented an efficient online process for the incorporation of companies known as the Simplified Proforma for Incorporating Company Electronically Plus (SPICe+). This form is divided into two integral parts: Part A and Part B.

    • Obtain a Digital Signature Certificate through listed Government Certifying Agencies. 

    • Part A of SPICe+ involves the facilitation of 'Name Reservation.' This section allows applicants to propose two potential names for the company, along with the option for re-submission if needed.

    • Part B of SPICe+ includes essential steps such as-some text
      • Application for the allotment of Director Identification Number (DIN)
      • Incorporation of the new company
      • Submission of the e-Memorandum of Association (e-MoA) and e-Articles of Association (e-AoA)
      • Applications for PAN, TAN, EPFO registration, ESIC registration, etc. 

    • File for the Commencement of Business Certificate through Form INC-20A within 180 days of incorporation.

    Following the approval of the SPICe+ Form, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially affirming the successful registration of your company. This crucial document includes essential details, including the company's name, registration number (CIN), date of incorporation, registered office address, and other pertinent information.

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    <H2> One Person Companies (OPCs)

    One Person Companies (OPCs) represent a distinctive form of business structure that allows a single individual to establish and operate a company. They seamlessly integrate the features of a Private Limited Company and the benefits associated with Sole Proprietorship. 

    Specifically crafted for entrepreneurs and business owners, OPCs are tailored to scenarios where a sole individual assumes ownership, operation, and management responsibilities for the entire business.

    Here are key aspects of One Person Companies:

    • Sole Ownership:

    An OPC is owned and operated by a single individual, known as the sole shareholder or member. This individual holds all the shares of the company, consolidating ownership in a singular capacity.

    • Limited Liability:

    Similar to other corporate structures, OPCs provide limited liability to the sole owner. 

    • Separate Legal Entity:

    OPCs enjoy the status of a separate legal entity distinct from the sole owner. This legal separation allows the company to enter into contracts, own assets, and engage in legal proceedings in its own name.

    • Perpetual Succession

    Even with just one member, the OPC has the feature of continuous succession. The nominee chosen while incorporating the OPC often takes over when the sole member is unavailable.

    This business form combines limited liability, a separate legal entity, and simplified operations, making it an attractive option for small businesses and startups led by a single entrepreneur.

    <H3> One Person Company Registration

    One Person Company (OPC) registration involves a step-by-step process to establish a business structure designed for a single owner. In a similar manner, SPICe+ is also implemented during the registration process to facilitate name reservation and application. 

    1. Obtain a Digital Signature Certificate (DSC) for the sole Director through various Government Certifying Agencies.
    1. Apply for name approval through Part A of the SPICe+ form which allows for the submission of up to two proposed names and one re-submission (RSUB).
    1. Draft the Memorandum of Association (MoA) and Articles of Association (AoA), which outline the company's objectives, rules, and regulations. 
    1. Submit Part B of the SPICe+ form, along with the necessary documents, including DSC, MoA, AoA, and declarations. Pay the prescribed fee for company registration.
    1. Appoint a nominee director, as required by OPC regulations.
    1. Within 180 days of incorporation, file for the Commencement of Business Certificate (Form INC-20A) with the Registrar of Companies.

    Upon the successful approval of the SPICe+ Form, an email notification will be sent by the Ministry of Corporate Affairs (MCA), enclosing the Certificate of Incorporation (COI) and the PAN and TAN details of the Company. 

    This certificate includes crucial details such as the Company Name, Registration Number (CIN), Date of Incorporation, Registered Office Address, Company Structure, and more.

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    Razorpay Rize provides a comprehensive suite of offerings that simplifies the complexities of business registration- exclusively designed to cater to the requirements of both startups and established businesses.

     

    Discover a hassle-free and entirely online business registration process with robust support and seamless document collection. Unlock the perks of being an incorporated company with Razorpay Rize!  

    Our package includes:

    • Company Name Registration
    • 2 Digital Signature Certificates (DSCs)
    • 2 Directors’ Identification Numbers (DINs)
    • Certificate of Incorporation(COI)
    • MoA & AoA [Applicable for Private Limited Companies and OPCs]
    • LLP Agreement [Applicable for LLPs]
    • Company PAN & TAN

    *Prices and documents can differ based on the company type.

    <H2> Which company type to register your business with?

    Before commencing the registration process for either a Limited Liability Partnership (LLP) or a company, it is essential to carefully assess the following factors.

    1. Consider the Nature and Size of Your Business:

    Evaluate the nature and size of your business. If your operations are on a smaller scale and you are a single operator, opting for OPC registration may be advantageous. Conversely, for larger businesses with substantial employee numbers and capital needs, registering as a Private Limited Company offers greater flexibility in capital raising.

    1. Fundraising Requirements:

    Assess your fundraising requirements. If your objective is to raise funds through equity, opting for a company structure is essential. However, if you can fundraise through debt options, the OPC structure may work. 

    1. Compliance Requirements:

    Generally, OPCs have fewer compliance requirements compared to Private Limited Companies, making them more suitable for small businesses. Nonetheless, ensure that you are aware of several post-incorporation compliances that come along with each business structure and choose accordingly. 

    <H2> Know Your Ideal Company Type

    For the first time in India, answer a brief set of questions about your startup, and our tool  "Know Your Company Type" will utilize your responses to pinpoint the ideal company registration type. 

    Discover your perfect fit with a single click!

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    Explore side-by-side comparisons of popular company types with prices to help you give a clear picture of the nuances involved with different legal structures. 

    Partnership Deed for Firms in India

    <image >

    A partnership deed is a legal document that outlines the rights, responsibilities, and obligations of individuals forming a partnership. 

    Typically drafted at the beginning of the partnership, the deed includes essential details such as the business name, purpose, and location. It also incorporates various clauses that highlight details about the partners, including aspects such as profit-loss sharing, salary, interest on capital, drawings, and the procedures for admitting a new partner. 

    In this blog, we’ll talk about how the Partnership Deed acts as the foundation for all partnership operations. 

    <H2> Format of a Partnership Deed

    <Image>

    The format of a partnership deed may vary based on the specific requirements of the partners and the nature of the business. However, a typical partnership deed includes the following essential elements:

    • Name of the Partnership:

    The official business name under which the partnership operates is stated, along with the physical address where the primary business activities occur. This section also highlights the duration of the partnership firm alongside the date of the commencement.

    • Details of the Partners

    This section includes the full name, address, and relevant particulars of the Individuals participating in the Partnership. 

    • Purpose:

    Here, the nature and scope of the business activities conducted by the partnership is clearly stated. The firm shall have the power to fulfill the objectives of the

    company and conduct any such lawful business activities.

    • Capital Contribution:

    The total capital of the firm and the individual share contributed by each partner are to be mentioned here. The contribution can be in cash, goods, or property on agreed values.

    • Profit and Loss Sharing:

    It clearly articulates the agreed-upon ratio or percentage in which profits and losses will be distributed among the partners. 

    • Financial Decisions:

    It includes information such as the partners' salary and commission, permissive drawings from the firm for each partner, the interest payable to the firm on these drawings, partnership loans, and other relevant details.

    • Admission and Retirement of Partners:

    This part outlines the criteria and process for admitting new partners into the business. Similarly, it details the procedures for the retirement or withdrawal of existing partners.

    • Dispute Resolution:

    Procedures for resolving disputes among partners are established. This may include mechanisms for mediation or arbitration to address conflicts and maintain a harmonious partnership.

    • Dissolution:

    It states the conditions and procedures for the dissolution of the partnership which highlights the distribution of assets, settlement of liabilities, and the overall process of winding up the business.

    • Witnesses and Signatures:

    The partnership deed is formally executed with the signatures of all partners, and done in the presence of witnesses. 

    <H2> How to draft a Partnership Deed?

    A partnership deed can be a verbal or written agreement outlining the rights, responsibilities, profit-sharing, and other obligations of the partners.

    While it can be recorded verbally, it is highly advisable to formalize a written partnership deed with the Registrar of Firms as it aids in resolving potential disputes. It also proves beneficial for tax purposes and ensures the formal registration of the partnership firm. 

    • The Partnership Deed, formulated by the partners, must be executed on stamp paper with a minimum value of Rs. 200, as per the Indian Stamp Act. 
    • Each partner should retain a copy of the partnership deed for future reference.
    • Once stamped, the Partnership deed is attached with the application to the Registrar of Firms for formal registration and legal validation.

    As per the Partnership Act, Registration of Partnership Firms is optional, but if you still choose to register your firm- 

    The application should be accompanied by essential documents, including a duly filled affidavit, a certified true copy of the Partnership Deed, and proof of ownership or a rental/lease agreement for the main business location.

    <H2> Validity of the Partnership Deed

    The validity of the firm is mentioned in the deed, whether it's for a limited period, for a specific project or for an unlimited period. 

    Note: A partnership deed that has been notarized alone does not hold legal validity in the event of legal disputes. However, if the partnership firm is formally registered with RoF, the partnership deed will be recognized as having legal standing. 

    <H2> Fees for the Partnership Deed in India

    The Partnership Deed must be executed on a stamp paper with a minimum value of Rs. 200, as per the Indian Stamp Act. 

    However, Partnership registration fees vary among states due to different compliance requirements and stamp duty rates. The cost for registering a Partnership Firm ranges from Rs. 500 to Rs. 3000

    Note: Stamp duty is calculated based on partner contributions and follows state-specific regulations.

    <H2> Alterations in the Partnership Deed

    Partners have the flexibility to modify, alter, or change the partnership deed through mutual agreement. All partners are required to sign the amended deed. 

    Subsequently, the modified partnership deed should be registered at the Sub-Registrar's office, where the original deed was registered. Additionally, it is necessary to submit the modified deed to the Registrar of Firms for record-keeping purposes.

    Are you an aspiring entrepreneur ready to make your business official? If so, one of the critical decisions you'll need to make is choosing the right business structure. From Private Limited Companies (PLCs) to Limited Liability Partnerships (LLPs) to One Person Companies (OPCs), each structure offers its own set of advantages and considerations.

    In this blog, we'll explore the nuances (features & differences) of these three popular business structures - Private Limited, LLP, and OPC—and provide insights to help you make an informed decision that aligns with your entrepreneurial goals.

    <H2> Difference between Private Limited, LLPs & OPCs

    Private Limited Company

    Limited Liability Partnership

    One Person Company

    Governing Act

    Governed by the Companies Act

    Governed by the Limited Liability Partnerships Act

    Governed by the Companies Act

    Suitable For 

    Financial Services, Tech Startups, Medium Enterprises

    Consultancy firms, Professional Services

    Franchises, Retail Stores, Small Businesses

    Shareholders/ Partners

    Minimum Shareholders - 2

    Maximum Shareholders- 200

    Minimum Partners - 2

    Maximum Partners - Unlimited

    Minimum Shareholders- 1

    Maximum Shareholders - 1

    (Maximum Directors can be 15)

    Nominee

    Not required

    Not required

    One Nominee mandatory

    Minimum Capital Requirement

    No minimum capital requirement, but it is often advised to set the authorized capital at INR 1,00,000 (One Lakh) 

    No minimum capital requirement, but it is often advisable to consider an initial capital of INR 10,000

    No minimum paid-up capital requirement exists. However, the minimum authorized capital required is INR 1,00,000 (One Lakh)

    Tax Rates

    The basic tax rate, excluding Surcharge and Cess is  25%

    The standard fixed rate is  30% on their generated earnings.

    The applicable Tax rate would be 25%, excluding cess and surcharge

    Fundraising 

    Easier to raise funds from Investors 

    Raising funds can be challenging

    Limited options for Fundraising

    DPIIT Recognition

    Eligible for DPIIT recognition

    Eligible for DPIIT recognition

    Ineligible for DPIIT recognition

    Transfer of Shares

    Shares can be easily transferred by amending the AOA

    Transfer of partnership rights may require the consent of other partners and is generally more complex

    Transfer of shares isn’t possible; it can only be done in case of transfer of ownership

    ESOPs

    Can issue ESOPs to the Employees

    Unable to issue ESOPs to the Employees

    Unable to issue ESOPs to the Employees

    Agreements

    Duties, Responsibilities, and other basic clauses outlined in MOA and AOA

    Duties, Responsibilities, and other basic clauses outlined in the LLP Agreement

    Duties, Responsibilities, and other basic clauses outlined in MOA and AOA

    Compliances

    • More compliance costs
    • Mandatory 4 Board Meetings
    • Mandatory Statutory Audits
    • Mandatory filings include Annual financial statements in form AOC-4 and annual returns in Form MGT-7, etc.
    • Less Compliance Costs
    • No mandatory Board Meetings
    • Statutory Audits are not required if turnover is less than 40 Lakhs, or capital contribution is less than 25 Lakhs.
    • Mandatory filings include Annual financial statements in Form 8 and annual returns in Form 11.
    • Less Compliance Costs
    • Minimum 2 Board Meetings
    • Mandatory Audits

    Foreign Directors/ Partners

    NRIs and Foreign Nationals can be Directors

    NRIs and Foreign Nationals can be Partners

    No foreign directors are allowed

    Foreign Direct Investment

    Eligible through Automatic route

    Eligible through Automatic route

    Not eligible for FDI 

    Mandatory

    Conversion

    No mandatory conversion 

    No mandatory conversion 

    If annual turnover exceeds Rs. 2 Crores or paid-up capital exceeds Rs. 50 lakhs, then mandatory conversion into a private limited company

    Now that we've introduced the differences between these three types, let's explore their features and registration processes more thoroughly. This will help you determine which one is the most suitable for your business needs.

    <H2> Private Limited Company: Features

    In India, the Private Limited Company stands as the predominant choice for company registration, governed by the Companies Act of 2013 under the jurisdiction of the Ministry of Corporate Affairs (MCA). This structure is favoured by startups and businesses aspiring for growth and stability, owing to its adaptable ownership model and efficient management practices.

    Outlined below are some key characteristics of a Private Limited Company:

    • Limited Liability: Shareholders enjoy limited liability, safeguarding personal assets from business debts.
    • Separate Legal Entity: Regarded as a distinct legal entity from its shareholders, allowing it to engage in contracts, own assets, and litigate under its name.
    • Ownership: Owned by shareholders who possess shares in the company, with ownership transfer facilitated through share transactions.
    • Management: Managed by appointed Directors, while day-to-day operations are overseen by management, with significant decisions often requiring shareholder approval.
    • Shareholders: Requires a minimum of two shareholders and can accommodate a maximum of 200.
    • Regulation and Compliance: Governed by the Companies Act and regulated by the Ministry of Corporate Affairs, mandating compliance with annual financial filings, general meetings, and statutory record maintenance.
    • Investment and Funding: Attracts investment and funding relatively easily due to its defined ownership structure and limited liability feature.

    <H2> Private Limited Company: Registration in India

    The Ministry of Corporate Affairs (MCA) has introduced a streamlined and online process for company incorporation known as Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), comprising two parts: Part A and Part B.

    The steps are as follows:

    1. Obtain a Digital Signature Certificate (DSC) from Certifying Agencies (CAs) with either one or two-year validity. 
    2. Apply for Name Approval using SPICe+ Part A which facilitates 'Name Reservation' with the provision for two proposed names and one re-submission (RSUB).

    Note: While simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is feasible, only one name can be reserved.

    1. Following name approval, apply for Company Registration using SPICe+ Part B, which also includes the application for allotment of Director Identification Number (DIN), Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), etc. 
    2. Open a current account for your company to facilitate seamless financial transactions and business operations.
    3. Within 180 days of incorporation, file the Commencement of Business Certificate through Form INC-20A, which is a declaration submitted by the Director of the Company to the Registrar of Companies.
    4. Upon approval of the SPICe+ Form, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

    The Certificate of Incorporation includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

    Example of CIN: U72200KA2013PTC097389

    Read more about what each letter in a CIN signifies here

    <CTA>

    <H2> Limited Liability Partnerships: Features

    A Limited Liability Partnership (LLP) is a business structure that combines features from both traditional partnerships and limited companies. And, LLPs are often favoured by professional services firms, small businesses, and ventures seeking the blend of partnership flexibility and limited liability protection.

    Key characteristics of an LLP include:

    • Limited Liability: Partners in an LLP benefit from limited liability akin to private limited companies.
    • Separate Legal Entity: An LLP exists as a distinct legal entity from its partners, capable of owning assets, entering contracts, and engaging in legal proceedings independently.
    • Ownership: Partners own the LLP, with the ownership structure outlined in the LLP agreement. Ownership transfer typically requires consent from other partners.
    • Management: Managed by partners or a designated management team as specified in the LLP agreement. Decision-making is often collaborative, with each partner having an equal say.
    • Number of Partners: Requires a minimum of two partners, with no maximum limit.
    • Regulation and Compliance: Governed by the Limited Liability Partnership Act in India, featuring less stringent regulatory requirements compared to private limited companies. Compliance entails filing annual returns and maintaining statutory records.
    • Flexibility: Offers enhanced flexibility in internal management and decision-making processes compared to private limited companies.

    <H2> Limited Liability Partnerships: Registration in India

    Establishing a Limited Liability Partnership (LLP) as a legally recognized business structure involves several crucial steps. Here is a brief and comprehensive outline of the LLP registration process. 

    • Obtain a Digital Signature Certificate (DSC) from Certifying agencies. To know more about the process, click here. 
    • Reserve an LLP's name via the LLP-RUN form, overseen by the Central Registration Centre. Up to two names can be proposed.
    • Fill out the FiLLiP form and submit it to the Registrar along with the Subscriber sheet and Director's consent (Form DIR-9).
    • File the LLP Agreement using Form 3 on the MCA portal within 30 days of registration.

    Upon approval of the FiLLiP Form by the Registrar of Companies (ROC), you will receive the Certificate of Incorporation, which has important details such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and so on.

    Example of LLPIN: AAA-1234

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    <H2> One Person Companies: Features

    One Person Companies (OPCs) present a unique business structure where a single individual can establish and manage a company. Combining aspects of a Private Limited Company and the advantages of Sole Proprietorship, OPCs cater to entrepreneurs and business owners who handle all ownership, operation, and management duties themselves.

    • Sole Ownership: An OPC is solely owned and managed by a single individual, referred to as the sole shareholder or member. 
    • Limited Liability: Like other corporate structures, OPCs offer limited liability protection to the sole owner.
    • Separate Legal Entity: OPCs are recognized as separate legal entities independent of the sole owner. This legal distinction enables you to enter contracts, own assets, and participate in legal proceedings under your company’s name.
    • Perpetual Succession: Despite having only one member, OPCs feature perpetual succession. A nominee appointed during incorporation typically assumes control in the absence of the sole member.

    By combining limited liability, separate legal entity status, and simplified operations, OPCs emerge as an appealing choice for small businesses and startups led by single entrepreneurs.

    <H2> One Person Company Registration: Registration in India

    Due to their similarities with private limited companies, OPCs also employ SPICe+ for their company registration process. 

    SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a comprehensive online form introduced by the Ministry of Corporate Affairs (MCA) in India to streamline and simplify the company registration process. 

    • Obtain a Digital Signature Certificate (DSC).
    • Apply for name approval using Part A of the SPICe+ form, allowing for submission of up to two proposed names and one re-submission.
    • Draft the Memorandum of Association (MoA) and Articles of Association (AoA) detailing the company's objectives and rules. 
    • Submit Part B of the SPICe+ form along with necessary documents, including DSC, MoA, AoA, and declarations. Pay the prescribed fee for registration.
    • Appoint a nominee director as required by OPC regulations.
    • Within 180 days of incorporation, file for the Commencement of Business Certificate (Form INC-20A) with the Registrar of Companies.
    • Upon successful approval of the SPICe+ Form, you’ll receive an email notification from the MCA containing the Certificate of Incorporation (COI) and PAN and TAN details of the Company.

    The certificate of Incorporation (COI) includes crucial details such as the Company Name, Registration Number (CIN), Date of Incorporation, Registered Office Address, Company Structure, and more.

    <CTA>

    For added clarity, check out our curated collection of sample templates, where you can download and customize most of these above-mentioned templates, as required. 

    <H2> Company Registration with Razorpay Rize

    Razorpay Rize provides a wide array of services to facilitate an end-to-end streamlined company registration process, all at the lowest fees and without any hidden charges. Explore the different legal structures below to find the one that’s best for your business. 

    Our package includes:

    • Company Name Registration
    • 2 Digital Signature Certificates (DSCs)
    • 2 Directors’ Identification Numbers (DINs)
    • Certificate of Incorporation(COI)
    • MoA & AoA [Applicable for Private Limited Companies and OPCs]
    • LLP Agreement [Applicable for LLPs]
    • Company PAN & TAN

    *Prices and documents can differ based on the company type.

    <H2> Find Out Which Company Type to Register 

    If you operate a small business with limited resources, opting for LLP or OPC registration might be more favourable due to lighter compliance requirements. However, for larger businesses with substantial capital needs, registering as a Private Limited Company provides greater flexibility in raising funds. So, before proceeding with the registration of either a Private Limited Company, LLP, or OPC, it is essential to carefully evaluate the following factors. 

    • Business Nature and Size
    • Fundraising Requirements
    • Tax Implications
    • Personal Liability Protection

    Ultimately, the choice between a Private Limited Company, LLP, or OPC structure depends on the unique characteristics of your business, including its nature, size, fundraising requirements, tax implications, and personal liability protection.

    Still confused about which company type to register with? We’ve got you covered! Introducing our latest tool - "Know Your Company Type."

    For the first time in India, answer a quick set of questions about your startup, and this tool will utilize your responses to identify the perfect company registration type for you. Find your ideal fit with just one click! 

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    In summary, choosing between Private Limited Companies, OPCs, and LLPs depends on your business goals and preferences. Each structure offers unique benefits, whether it's scalability with Private Limited Companies, convenience with OPCs, or simplicity with LLPs. If you have any unanswered questions or want to get started with the company registration process, feel free to get in touch with us! 

    A Digital Signature Certificate (DSC) is a secure digital key issued by a trusted authority, known as a Certificate Authority (CA), that is used to authenticate the identity of individuals, organizations, or devices in the digital world. 

    It is a digital equivalent of a handwritten signature or a stamped seal, providing assurance of the signer's identity and the integrity of the signed document or message. In general, a DSC includes details such as name, postal code, country, email address, certificate issuance date, and the name of the certifying authority.

    In this blog, we'll explore the significance of DSCs, the process of applying for them in India, and their key features.

    <H2> Importance of a Digital Signature Certificate

    The importance of a Digital Signature Certificate (DSC) lies in its ability to provide strong authentication, integrity, and proper encryptions in digital transactions and communications. 

    Here are several key reasons why DSCs are important and why you should apply for one as a founder:

    • Authentication: DSCs verify the identity of individuals, organizations, or devices involved in digital transactions, ensuring that the sender is who they claim to be.

    • Integrity: Digital signatures created using DSCs ensure the integrity of electronic documents or messages by detecting any unauthorized changes or tampering.

    • Security: DSCs use strong cryptographic techniques to protect sensitive information and prevent unauthorized access. 

    • Legal Recognition:  In India, many industries and regulatory frameworks require the use of DSCs for specific types of transactions or communications to comply with security and privacy regulations. 

    • Government Services: DSCs play an important role in the company registration process irrespective of the company type. Accessing government services, filing tax returns, or participating in e-tendering processes require digital signatures for authentication and authorization.

    • Efficiency: DSCs streamline digital workflows by enabling secure and paperless transactions without the physical presence. 

    Overall, DSCs offer numerous benefits, including enhanced security, legal validity, efficiency, and cost savings, making them indispensable for digital transactions and communications

    <H2> Different Classes of Digital Signature Certificates (DSCs)

    Certifying authorities issue 3 types of DSCs to accommodate various needs and purposes.

    The type of applicant and the intended use of the Digital Signature Certificate determine the specific kind of DSC that should be sought based on the requirements.

    Class 1 DSC:

    • These certificates are issued for individuals or private users and are primarily used for email communication and basic transactions.
    • Verification requirements are minimal, typically involving email validation or verification of basic personal information.

    Class 2 DSC:

    • Class 2 certificates are used for both individual and organizational purposes and offer a higher level of security and trust compared to Class 1.
    • To obtain a Class 2 DSC, the applicant's identity is verified against a trusted government-issued identity document, such as a passport or driver's license.

    Class 3 DSC:

    • Class 3 certificates provide the highest level of security and are typically used for online transactions involving high-value financial transactions, e-commerce, and government applications.
    • The verification process for Class 3 DSCs involves rigorous identity verification procedures, including in-person verification and submission of supporting documents.

    <H2> Certifying Authorities in India

    Certifying Agencies are designated by the office of the Controller of Certification Agencies (CCA) in accordance with the provisions of the IT Act, 2000. Currently, there are eight Certification Agencies authorized by the CCA to issue Digital Signature Certificates (DSCs).

    • MTNL CA
    • TCS
    • IDBRT
    • SAFESCRYPT
    • nCODE solutions
    • NIC
    • Central Excise and Customs
    • e-Mudhra

    <H2> Format of a Digital Signature Certificate

    A DSC typically contains the following components:

    • Public Key: A cryptographic key that is made publicly available and used to verify digital signatures created by the corresponding private key.

    • Private Key: A secret key that is securely held by the owner and used to create digital signatures for documents or messages.

    • Certificate Information: Details about the certificate, including the issuer (Certifying Authority), the validity period, a unique identifier, the subject (owner), and the digital signature of the CA to confirm its authenticity.

    • Digital Signature: A unique digital signature generated using the private key of the certificate, which can be verified using the corresponding public key.

    The format of a Digital Signature Certificate (DSC) can vary depending on the issuing Certificate Authority (CA) and the type and class of the certificate. 

    <H2> Documents required for obtaining a Digital Signature Certificate

    The documents required for obtaining a Digital Signature Certificate (DSC) include:

    • Proof of Identity: Copy of any one of the following government-issued identity documents attested by a Gazetted officer:some text
      • Passport
      • Aadhaar Card
      • PAN Card
      • Voter ID Card

    • Proof of Address: Copy of any one of the following documents showing the applicant's residential address attested by a Gazetted officer:some text
      • Utility bill (electricity, water, gas, telephone)
      • Bank statement
      • Rent agreement

    • Passport Size Photograph

    Recent passport-size color photograph of the applicant.

    • Self-attested Copy of PAN Card

    A self-attested photocopy of the applicant's PAN Card.

    • Organization Documents (if applicable):

    For organizations, additional documents such as the Certificate of Incorporation, Memorandum of Association (MOA), Articles of Association (AOA), or Partnership Deed may be required.

    It's important to note that the specific documents required may vary depending on the type of Digital Signature Certificate (e.g., Class 1, Class 2, Class 3), the Certification Authority (CA) issuing the certificate, and the purpose for which the certificate is being obtained. 

    <H2> How to apply for a Digital Signature Certificate?

    Razorpay Rize simplifies this process by streamlining e-filing on the MCA portal (company registration process), and as part of the package, you can acquire 2 Digital Signature Certificates for the involved directors/partners.

    Note: It's necessary to obtain a Digital Signature Certificate (DSC) of either the Class 2 or Class 3 signing certificate category issued by a licensed Certifying Authority (CA) to facilitate e-filing on the MCA Portal for company registration processes. 

    Alternatively, you also have the option to apply for DSCs through designated certifying agencies through the following steps.

    • Choose a Certifying Authority (CA) accredited by the Controller of Certification Agencies (CCA) under the provisions of the IT Act, 2000.
    • Determine the type and class of DSC required based on your needs and the level of security required (e.g., Class 1, Class 2, Class 3).
    • Gather the necessary documents, including proof of identity, proof of address, passport-size photograph, self-attested copy of PAN card, and any organization-related documents (if applicable).
    • Obtain and fill out the DSC application form provided by the chosen Certifying Authority. Fill in the necessary details like the Class of the DSC, validity, type, applicant name and details, residential address, etc. 
    • Undergo the identity verification process as per the CA's requirements, which may involve in-person verification or online verification, depending on the type of DSC and the CA's policies.
    • Pay the prescribed fees
    • Upon successful verification and payment, the Certifying Authority will generate a unique key pair consisting of a public key and a corresponding private key.
    • Once the key pair is generated, the Certifying Authority will issue the Digital Signature Certificate.
    • Install the DSC on the appropriate device or token as per the CA's instructions.

    <H2> Validity of the Digital Signature Certificate

    Digital Signature Certificates (DSCs) are commonly issued with either a one-year validity or a two-year validity period. 

    These certificates can be renewed upon expiry of the initial validity period. Renewal procedures typically involve submitting updated documentation and undergoing identity verification processes, similar to the initial application process.

    <H2> Fees for the Digital Signature Certificate in India

    If you’re registering your business with Razorpay Rize, DSCs are commonly included in the package regardless of the company type. 

    In the case of direct applications, the fees include various components, including the one-time cost of the medium (such as a USB token), the Digital Signature Certificate (DSC) issuance cost, the renewal cost after the validity period expires, and the support costs (if any).

    The costs, as mentioned on the MCA website, are as follows-

    Certifying Authority

    Cost of DSC with one-year validity, excluding USB token cost & Taxes

    Cost of DSC with two-year validity, excluding USB token cost & Taxes

    MTNL CA

    Rs. 300/- ( for MTNL phone subscribers) and Rs. 450/- for others 

    Rs. 400/- ( for MTNL phone subscribers) and Rs. 600/- for others

    TCS

    Rs. 1245 (Inclusive of 12.24% Sales Tax.)

    Rs. 1900/- (Inclusive of 12.24% Sales Tax)

    IDBRT

    Rs. 750/- (Rs. 500/- towards administrative expenses and Rs 250/-for Certificate)

    Rs. 1500/-

    SAFESCRYPT

    Rs. 995/-

    Rs. 1650/-

    NIC

    NIL for Government Rs. 150/- for PSU, Autonomous & Statutory Bodies

    NIL for Government Rs. 150/- for PSU, Autonomous & Statutory Bodies

    Central Excise and Customs

    NA

    NA

    e-Mudhra

    Rs. 899/-

    Rs. 1149/-

    <H2> Frequently Asked Questions

    <H3> Is there a difference between a digital signature and a DSC?

    Yes, a digital signature refers to the cryptographic technique used to sign electronic documents, while a DSC is the digital certificate that contains a digital signature key pair and is used to verify the signer's identity.

    <H3> What are the different types of DSCs valid during Company registration?

    The different types of Digital Signature Certificates currently valid during company registration are class 2 and class 3 types.

    <H3> Is a Director Identification Number (DIN) required to apply for DSC?

    No, you can apply for a DSC without the DIN with supported documents as mentioned in the above sections

    <H3> How can I check the validity of a DSC?

    To check the validity of a Digital Signature Certificate (DSC), you can follow these steps:

    • Access the different USB token tools that are currently available.
    • Login & enter the token password when prompted.
    • Select your certificate name from the list. 
    • Once selected, the certificate will open. Navigate to the ‘Details’ tab, where you will find comprehensive information about your certificate, including its validity details.

    The Director Identification Number (DIN) is a unique identification number assigned to an individual who is appointed as a director of a company in India. It is issued by the Ministry of Corporate Affairs (MCA) under the provisions of the Companies Act 2013. 

    The DIN is mandatory for all existing and aspiring directors, and it serves as a way to track the activities and roles of directors across different companies to prevent fraud and ensure transparency.

    In the blog, we'll explore the intricacies of the Director Identification Number (DIN) system in India and its crucial role in corporate governance.

    <H2> Importance of a Director Identification Number (DIN)

    The Director Identification Number (DIN) is of significant importance in India's corporate governance framework. Here are some key reasons why DIN is crucial:

    • Unique Identification: DIN provides a unique identification number to each director, ensuring there is clarity among individuals holding directorial positions in various companies.
    • Transparency and Accountability: DIN enhances transparency by making director-related information publicly available. 

    Stakeholders, including shareholders, regulators, and investors, can access the DIN database to verify the credentials and track the activities of directors across different companies.

    • Regulatory Compliance: Obtaining a DIN is a mandatory requirement for individuals aspiring to become directors of Indian companies. The DIN system in India was implemented through Sections 266A to 266G of the Companies (Amendment) Act, 2006.
    • Ease of Business Operations: DIN streamlines administrative processes related to director appointments and changes. 

    By having a standardized identification system for directors, companies can efficiently manage their board compositions, update regulatory filings, and ensure compliance with legal requirements.

    • Investor Confidence: The existence of a robust director identification system like DIN instills confidence among investors, both domestic and international.

    <H2> Format of a Director Identification Number

    The DIN is an 8-digit identifier issued by the Ministry of Corporate Affairs (MCA), the regulatory authority overseeing corporate affairs in India. 

    Each DIN is unique to the individual director and remains valid for their lifetime unless surrendered or revoked by the MCA due to non-compliance or other regulatory reasons.

    Example of a DIN: 002345678

    <H2> Documents required for obtaining a Director Identification Number

    For SPICe+:

    • Proof of Identity
    • Proof of Address
    • NOC or Rental Agreement 

    For DIR 3:

    • Proof of Identity
    • Proof of Residence
    • NOC or Rental Agreement
    • Digital Signature Certificate (DSC)

    Note: The identity proof and Address proof must be attested by the Company Secretary, a CA or, any professional. , 

    <H2> How to apply for a Director Identification Number?

    Obtaining a Director Identification Number (DIN) is mandatory before being appointed as a director of an existing company or designated partner of an existing Limited Liability Partnership (LLP) in India. 

    While the DIN for directors of a new company is allotted during the company's incorporation through an integrated SPICe+ Form, if you’re seeking directorship in existing companies or LLPs, you must apply for a DIN separately. The application process, known as DIR-3, can be completed online through the official website of the Indian Ministry of Corporate Affairs (MCA).

    Through SPICE+ :

    If you don’t have a Director Identification Number (DIN) and intend to serve as the first director in a new company, you must submit an application using the eForm SPICe+.

    1. Obtain the Digital Signature Certificates (DSCs) for the proposed Directors, 
    2. Log in to the MCA portal with valid credentials.
    3. Navigate to the 'SPICe+' application from the application history on the user dashboard.
    4.  Submit the SPICe+ Part A application.
    5. Click on the 'Proceed for incorporation' button.
    6. Access the SRN dashboard by clicking on the relevant SRN/SPICe+ application with the status as 'Draft.'
    7. Click on "Form No. SPICe + Part B”.
    8. Complete and Submit the SPICe+ Part B application along with the linked forms.
    9. Upload the DSC-affixed PDF document(s).
    10. Pay the fees.
    11. An intimation mail, along with the Certificate of Incorporation, PAN, TAN, etc., will be generated upon processing the web form.
    12. If the forms are uploaded successfully and the payment is made, the Approved DIN will be generated if there are no indications of potential duplication. However, if the details are flagged as potentially duplicate, a Provisional DIN will be generated instead.

    Note: A provisional DIN will remain valid for a period of 60 days from the date on which it was generated.

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    Through DIR 3:

    If you intend to become a Director in an existing company, you must submit an application using eForm DIR-3 and adhere to the process outlined below.

    1. Visit the official MCA website.
    2. Register as a new user if you haven't already done so, or log in using valid credentials.
    3. Select the "e-Forms" tab and click on the "e-Form upload" link to access the e-Form DIR-3.
    4. Complete the DIR-3 form with accurate details.
    5. Scan and upload the necessary supporting documents (attested) as per the requirements specified in the DIR-3 form.
    6. Form DIR-3 must be signed by you and digitally verified by a Company Secretary employed full-time by the company or by the Managing Director, Director, CEO, or CFO of the existing company where you intend to be appointed as a director.
    7. Pay the prescribed fee for processing.
    8. Once the verification process is completed and the application is found to be in order, you will be allotted a DIN. 
    9. However, if the details are flagged as potentially duplicate, a Provisional DIN will be generated by the MCA. 

    As a director, you must notify all companies where you hold a directorship about the DIN within one month of receiving it from the central government. Subsequently, the company must inform the Registrar of Companies (RoC) within 15 days from the date when the director notifies them of their DIN. Failure to do so can incur penalties.

    <H2> Common Causes of Rejection of a DIN

    Here are some common mistakes that lead to the rejection of the DIN application:

    • Failure to submit supporting documents
    • Submission of invalid application or supporting documents
    • Lack of attestation on documents
    • Absence of a valid Digital Signature Certificate (DSC) for DIR3 applications

    <H2> Validity of the Director Identification Number

    In India, the Director Identification Number (DIN) remains valid for the lifetime of the individual director unless surrendered or revoked by the Ministry of Corporate Affairs (MCA) due to non-compliance, disqualification, or other regulatory reasons.

    <H2> Fees for the Director Identification Number in India

    If you are applying for a DIN through SPICe+, there are no additional charges as it is included in the fees of the SPICe+ application. 

    However, if you are applying through DIR-3, a fee of Rs 500 will be associated with it.

    <H2> Frequently Asked Questions

    <H3> 1.  Is there any difference between a Director Identification Number(DIN) and a Designated Partner Identification Number (DPIN)?

    DIN is for individuals holding or intending to hold directorial positions in companies under the Companies Act, while DPIN is for designated partners in Limited Liability Partnerships (LLPs) under the Limited Liability Partnership Act. However, in terms of functionality, both serve the same purpose. 

    <H3> 2. Can I use my DIN for multiple companies?

    Yes, a single DIN can be used to hold directorship positions in multiple companies. However, each company must separately intimate the Registrar of Companies (RoC) about the director's DIN.

    <H3> 3. Can I hold multiple DINs?

    No, you can hold only one DIN at any point in time. It is illegal to possess multiple DINs, and individuals found to have more than one may face penalties and other legal consequences.

    <H3> 4. How can I change the details provided for my DIN in the future?

    In case of any modifications to the particulars provided in form DIR-3/SPICe concerning directors, you can submit e-form DIR-6. For example, if there is an address change, you must notify this change by submitting an e-form DIR-6 along with the necessary attested document.

    <H3> 5.  What happens if my DIN application is rejected?

    If your DIN application is rejected, you will receive a communication from the MCA specifying the reasons for rejection. You may have the option to rectify the errors and reapply.

    <H3> 6. Can I transfer my DIN to someone else?

    No, a DIN is non-transferable and is associated only with the individual director to whom it is assigned.

    <H1> Types of Business Licenses in India

    With a multitude of regulations varying from state to state, figuring out what licenses you need and how to obtain them can feel like attempting to solve a complex puzzle with missing pieces. However, worry not! We understand the challenges you face, and we're here to guide you through every step of the way. 

    In this blog, we'll lead you through the intricacies of obtaining the necessary licenses to set up and operate your business seamlessly in India.

    <H2> Importance of Business Licenses

    Business licenses play a crucial role in India's business landscape for several reasons:

    Legal Compliance: Obtaining the necessary licenses ensures that businesses operate within the legal framework defined by government regulations. 

    Consumer Trust and Safety: Certain licenses, such as FSSAI licenses for food-related businesses or health licenses for healthcare providers, signify compliance with safety and quality standards. 

    Public Health and Environmental Protection: Licenses related to environmental clearances, waste management, and pollution control are essential for businesses to mitigate their environmental impact.

    Taxation and Revenue Generation: Business licenses, such as GST registration and professional tax registration, facilitate tax compliance and revenue generation for the Government. 

    Regulation of Market Competition: Certain licenses, such as trade licenses and import-export licenses, regulate market entry and competition.

    Employee Welfare and Labor Rights: Labor licenses ensure that businesses adhere to labour laws and provide a safe and fair working environment for employees. 

    Last but certainly not least, business licenses are a badge of honour for your business. They show investors, partners, and customers that you're serious, professional, and committed to doing things the right way. In a crowded marketplace, that kind of credibility can make all the difference.

    <H2> Common Types of Business Licenses in India

    In India, obtaining the necessary business licenses depends on the type of business activity you intend to undertake and the location in which you plan to operate. Here are some common types of business licenses required in India:

    <H3> Business Registration:

    While not classified as a license, registering a business with the Ministry of Corporate Affairs (MCA) in India is a fundamental legal requirement if you are an entrepreneur establishing a business venture.

    Depending on the type of business structure chosen, such as sole proprietorship, partnership, limited liability partnership (LLP), or private/public limited company, the eligibility criteria, registration process, and compliance obligations can vary significantly. 

    There are primarily following types of Business structures:

    Ultimately, registering your business with the MCA not only establishes its legal legitimacy but also lays the foundation for growth, credibility, and long-term success in the Indian startup ecosystem.

    For detailed information regarding the eligibility criteria, registration process, and compliance obligations associated with different business structures, check out the link below. 

    Company Registration in India - Online Incorporation Process Explained

    <H3> Udyam Registration - MSME License

    Similarly, Udyam Registration is not technically a license. However, it provides recognition and certain benefits to Micro, Small, and Medium Enterprises (MSMEs) in India. 

    The eligibility criteria for Udyam Registration are based on the investment, turnover, years of establishment, etc.

    Once registered as an MSME, you can receive a unique Udyam Registration Number (URN) and a certificate that gives access to government schemes, subsidies, and incentives.

    <H3> GST Registration

    In India, Goods and Services Tax (GST) registration is mandatory for businesses meeting certain turnover thresholds, which is Rs. 40 Lakhs (for goods) and Rs. 20 Lakhs (for services) or engaging in specified activities. 

    Here's an overview of the process of obtaining GST registration, which is not exactly a license but a crucial registration for businesses:

    1. Access the official GST portal
    2. Fill out the registration form with accurate details regarding your business activities, turnover, and so on. 
    3. Furnish the necessary information, including business details, PAN, Aadhaar, bank account details, and relevant documents.
    4. Upon successful verification, you will be issued a unique Goods and Services Tax Identification Number (GSTIN)- a 15-digit unique identifier for the businesses under the GST regime.

    <H3> Professional Tax Registration

    Professional Tax Registration is a requirement for employers and individuals engaged in certain professions, trades, or employment in India. It is a state-level tax levied by the respective State Governments for the welfare of professionals and workers in various sectors.

    In some states like Maharashtra, obtaining professional tax registration is mandatory.  

    <H3> Shops and Establishment License 

    The Shops and Establishment License is a mandatory requirement for businesses operating within a specific jurisdiction, typically at the state level, in India. It is governed by the respective state Shops and Establishment Act and its rules, which vary slightly across different states.

    The primary purpose of the Shops and Establishment License is to regulate the operations of shops, commercial establishments, and other businesses within a state with provisions related to-

    • Working hours
    • Welfare and safety of employees
    • Employment practices

    The Shops and Establishment License is usually valid for a specific period, after which it needs to be renewed to continue operating legally.  A valid Shops and Establishment License is often required for various business activities, including obtaining other licenses, permits, or registrations.

    <H3> Trade License

    A trade license is a legal permit issued by the local municipal authority or council that authorizes your business to engage in specific commercial activities within a designated area or jurisdiction. 

    Trade licenses specify the types of commercial activities that a business is permitted to undertake. These activities may include manufacturing, trading, storage, distribution, or provision of certain services, depending on the nature of the business and local regulations.

    In order to obtain a Trade license, you must submit an application to the local municipal authority or council responsible for issuing licenses. The application process typically requires businesses to provide certain documents, such as - 

    • Proof of identity,
    • Address proof,
    • Proof of ownership or tenancy of the premises
    • Approvals and NOCs (No Objection Certificates) from relevant authorities

    Once the application is approved and all requirements are met, the local authorities will issue the trade license to your business, specifying the permitted activities, duration of validity, and any conditions or restrictions.

    <H3> Labour License

    Labour licenses, also known as labour permits or labour registrations, are legal authorizations issued by government authorities (Shram Suvidha Portal) to businesses, particularly those employing a significant number of workers, to ensure compliance with labour laws and regulations.

    It safeguards the rights and interests of workers by setting standards for fair treatment, safe working conditions, and adequate remuneration. These licenses often require businesses to adhere to minimum wage laws, working hour restrictions, overtime compensation, leave entitlements, and other labour standards aimed at promoting employee well-being.

    The process of obtaining a labour license may vary depending on the jurisdiction and the specific requirements imposed by labour laws and regulations.

    <H3> Food Safety and Standards Authority of India (FSSAI) License

    The Food Safety and Standards Authority of India (FSSAI) license, commonly referred to as the FSSAI license, is a mandatory requirement for businesses involved in the manufacturing, processing, packaging, storage, distribution, and sale of food products in India.

    Obtaining an FSSAI license is a legal requirement for food businesses operating in India. It is mandated by the Food Safety and Standards Act of 2006, and non-compliance can result in penalties, fines, or even closure of the business.

    Depending on the scale and nature of the business, there are different types of FSSAI licenses, such as Basic Registration, State License, and Central License, each catering to specific business activities and turnover thresholds.

    <H3> Import-Export License

    An import-export license, also known as an import-export permit, is a legal authorization issued by government authorities that allows businesses to engage in the importation and/or exportation of goods across international borders.

    An Importer Exporter Code is mandatory for the export and import of goods. It is a 10-digit identification number that is compulsory for the purpose of exporting from India as well as for the purpose of importing to India. It has lifetime validity. 

    The process to obtain an Import Export Code (IEC) registration certificate online involves several steps, as outlined below:

    1. Fill out the Application Form.
    2. Gather the necessary documents as per the requirements specified.some text
      1. For Private Limited/ LLPs- Company PAN Card, Incorporation Certificate, Aadhar Card, PAN Card of all Directors/Partners, and Cancelled Cheque of the Company.
      2. For Partnerships- Partnership Firm PAN Card, Partnership Deed, Aadhar Card, PAN Card of all Partners, and Cancelled Cheque of the Partnership Firm.
    3. Pay the required Fees.
    4. Upon successful verification and processing, the Import Export Code (IEC) registration certificate will be issued. You will receive the certificate electronically using the registered email ID provided during the application process.

    While we covered some common licenses necessary for businesses in India, certain industry-specific licenses and permits exist that are crucial for compliance with sector-specific laws, regulations, and standards. These can vary widely depending on the nature of the industry, the type of activities involved, and the potential risks or impacts associated with the operations.

    To conclude, securing these licenses is crucial for the seamless operation of your business. However, it's essential to prioritize registering your business as a legal entity beforehand, as this step is often a prerequisite for applying for most of these licenses.

    Razorpay Rize simplifies this fundamental yet vital aspect of the process with its online company registration services. To learn more about how Razorpay Rize can assist you, click below.

    <CTA>

    Types of Companies in India

    Companies form the backbone of India’s vibrant and dynamic economy, contributing significantly to its growth and development on both domestic and global fronts. From the bustling streets of Mumbai to the tech hubs of Bangalore, companies of all sizes and shapes dot the Indian subcontinent. 

    Companies in India are regulated by the Companies Act, which governs the incorporation, operation, management, and dissolution of companies. 

    In this blog, we will explore the various dimensions of company types in India and their classifications based on size, liability, listing status, and more. 

    <H2> Types of Companies Based on Members

    Companies based on members typically pertain to the structure of ownership or number of shareholders within the company. In this context, companies can be categorized based on the number of individuals or entities that hold ownership or membership in the company. 

    Here are the main types of companies based on members:

    <H3> Private Limited Company

    Private Limited Company (Pvt Ltd) is one of the most common and preferred forms of business entities in India, particularly for small to medium-sized enterprises (SMEs) and startups. This corporate structure offers several advantages that make it an attractive choice for entrepreneurs and investors alike.

    Furthermore, Pvt Ltd companies have access to various funding sources, including equity financing, debt financing, and venture capital investment. The ability to issue shares to investors enables Pvt Ltd companies to raise capital for expansion, innovation, and strategic initiatives, fueling growth and competitiveness.

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    <H3> One Person Company

    At its core, an One Person Company is a hybrid entity that combines the benefits of a sole proprietorship with the advantages of a private limited company. It enables you to establish a separate legal entity as a single individual for your business activities, shielding personal assets from business liabilities. 

    <CTA>

    <H3> Public Limited Company

    A Public Limited Company represents a dynamic and robust business entity widely recognized for its scalability, transparency, and access to capital markets.

    One of the primary advantages of a Public Limited Company is the ability to raise capital through public offerings of shares and debentures. 

    By issuing shares to the public, you can attract a diverse pool of investors, including institutional investors, retail investors, and financial institutions. This will facilitate substantial capital infusion for expansion, investment in new projects, and strategic acquisitions.

    <H3> Section 8 Company

    Section 8 Company, also known as a Section 8 Company under the Companies Act 2013, is a unique form of non-profit organization (NPO) established for promoting charitable or not-for-profit objectives, such as education, art, science, religion, social welfare, environment conservation, and more.

    This legal structure is primarily designed for organizations engaged in activities for the promotion of social welfare or national interest without the intention of earning profits or dividends for its members.

    Adding to the list of types of companies, there are other legal structures that aren’t considered companies but are equally important, such as-

    <H2> Types of Companies Based on Size

    In India, companies can be categorized based on their size, typically determined by factors such as turnover, capital investment, and employee count. Here are the main types of companies in India based on size:

    1. <H3> Micro Enterprises

    Micro-enterprises are the smallest category of companies, characterized by low investment in plant and machinery or equipment. In India, micro-enterprises are defined as those with an investment of up to Rs. 1 crore in manufacturing and an annual turnover of Rs. 5 crore.

    1. <H3> Small Enterprises

    Small enterprises are slightly larger than micro-enterprises but still fall within the small-scale sector. In India, small enterprises are defined as those with an investment of not more than Rs. 10 crore and an annual turnover of not more than Rs. 50 crore.

    1. <H3> Medium Enterprises 

    Medium enterprises are larger than small enterprises but smaller than large corporations. In India, medium enterprises are defined as those with an investment of more than Rs. 50 crore in manufacturing and an annual turnover of not more than Rs. 250 crore. 

    1. <H3> Large Enterprises 

    Large enterprises are the largest category of companies, characterized by substantial investment, high turnover, and a large workforce. In India, large enterprises have investments exceeding Rs. 50 crore in manufacturing or Rs. 250 crore in services. They often have hundreds or even thousands of employees and operate nationally or multinational.

    These categories are defined by the Ministry of Micro, Small, and Medium Enterprises (MSME) in India to provide various benefits and incentives to small and medium-sized enterprises (SMEs), such as priority lending, subsidies, tax exemptions, and easier access to government schemes and programs. 

    <H2> Types of Companies Based on Liabilities

    Companies can be categorized based on the extent of liability their members or owners have. Some major types of companies based on liabilities are-

    1. <H3> Company Limited by Shares

    A Company Limited by Shares is a type of company where the liability of its members is limited to the amount unpaid on their shares. This means that shareholders are not personally liable for the company's debts beyond the amount they have agreed to contribute towards the shares they hold. 

    Companies Limited by Shares can be further classified into private limited companies and public limited companies based on the number of shareholders and other criteria.

    1. <H3> Company Limited by Guarantee 

    In a Company Limited by Guarantee, the liability of its members is limited to the amount they agree to contribute to the company's assets in the event of its winding up. This type of company is commonly used for non-profit organizations, clubs, societies, and associations.

    1. <H3> Unlimited Liability Company

    In an Unlimited Liability Company, the members or owners have unlimited personal liability for the company's debts and obligations. This means that their personal assets are at risk to satisfy the company's liabilities, and creditors can pursue the members' personal assets to settle debts owed by the company.

    <H2> Types of Companies Based on Listing Status

    Companies can also be classified based on their listing status, which refers to whether their shares are listed on a stock exchange for public trading. 

    1. <H3> Listed Companies

    Listed companies are those whose shares are listed and traded on a recognized stock exchange, such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India. 

    These companies are subject to stringent regulatory requirements and disclosure norms mandated by the Securities and Exchange Board of India (SEBI). Listing provides liquidity to shareholders and enables the company to raise capital by issuing additional shares to the public.

    1. <H3> Unlisted Companies

    Unlisted companies are those whose shares are not traded on any stock exchange. These companies may be privately held, meaning that their shares are owned by a small group of shareholders or closely held by promoters and investors. 

    Unlisted companies are not subject to the same level of regulatory scrutiny as listed companies but may still be required to comply with certain statutory requirements under the Companies Act.

    <H2> Types of Companies Based on Holding

    Companies can be categorized based on their holding structure, which refers to the relationship between parent companies and their subsidiaries. 

    1. <H3> Parent Company

    A parent company is a corporation that owns a controlling interest in one or more subsidiary companies. It typically holds more than 50% of the voting rights in the subsidiary companies and has the power to make decisions affecting their operations and strategic direction.

    1. <H3> Subsidiary Company

    A subsidiary company is a company that is controlled by another company, known as the parent company. Subsidiary companies can be wholly or partially owned by the parent company, depending on the percentage of shares held. 

    Subsidiary companies operate independently but are subject to the control and influence of the parent company.

    1. <H3> Holdings Company

    A holdings company is a company whose primary purpose is to hold investments in other companies rather than engage in operational activities. Holdings companies typically own shares in subsidiary companies and may provide their subsidiaries with strategic direction and financial support.

    Unlike a parent company, a holding company does not engage in business operations of its own.

    1. <H3> Affiliate Company

    An affiliate company is a company that is related to another company through common ownership or control. Affiliate companies may be part of the same corporate group or have a strategic partnership with each other.  

    1. <H3> Associate Company

    An associate company is one in which another company holds a significant but not controlling interest, usually between 20% to 50% of the voting rights. While the investing company has influence over the associate company's operations and management, it does not exercise full control.

    In conclusion, from sole proprietorships and partnerships to corporations and joint ventures, each type of company offers distinct advantages and considerations suited to various business needs and objectives. As the business landscape continues evolving, choosing the right company type cannot be overstated.

    <H1> Company Registration in USA from India

    In recent years, there has been a discernible shift among Indian entrepreneurs towards incorporating their companies in the United States. The surge in Indian startups seeking investment from U.S. sources has contributed significantly to this inclination to establish a foothold in the American market. 

    This trend is driven by several factors, including access to a larger pool of venture capital and angel investors in the U.S., as well as the desire to tap into the vast market potential.

    In today’s blog, we'll explore the essentials of U.S. incorporations, covering essential factors and offering insightful guidance on navigating cross-border requirements.

    <H2> Benefits of USA Company Registration

    It is highly advisable to go for U.S. incorporation when aiming to raise capital from U.S. investors or penetrate the U.S. market with product sales. Beyond the inherent credibility associated with a U.S. business entity, it instills investor confidence and aligns with U.S. regulatory expectations. 

    1. It boasts a thriving and a diverse business ecosystem, providing access to a vast market, diverse consumer base, and a network of established businesses and startups.

    1. Companies incorporated in the U.S. often find it easier to attract investment, whether through venture capital, private equity, or public markets. 

    1. It is home to renowned innovation hubs such as Silicon Valley, which fosters creativity, collaboration, and technological advancement. This can be especially beneficial for tech startups and businesses in emerging industries.

    1. It offers a relatively straightforward process for business incorporation. Many states, like Delaware, have business-friendly regulations and efficient online platforms that facilitate the setup and management of companies.

    1. While the U.S. tax system is complex, businesses may find advantages in various tax incentives and deductions, especially if structured as certain types of corporations.

    1. It can serve as a strategic base for international expansion, providing a gateway to both North American and global markets.

    <H2> Types for Company Registration in USA from India

    The United States offers several types of legal structures for businesses, each with its own characteristics and implications. Here are some of the most common types:

    • Single-Person Businesses
    • S Corporations
    • C- Corporations (C-Corp)
    • Limited Liability Companies (LLCs)
    • Non-profit Organizations

    Regarding U.S. business structures, two predominant forms of incorporation stand out: Limited Liability Companies (LLCs) and C-Corporations (C-Corps). These structures offer distinct features tailored to diverse business needs and goals.

    • If you want lower compliance and small franchise fees: An LLC may be a suitable choice, especially for small businesses or startups with simpler structures and a desire for reduced administrative burdens.

    • If you want to raise funds: If the goal is to attract external investment, issue stock, or go public in the future, a C Corporation is often more attractive to investors and provides the necessary flexibility for these activities.

    <H2> Minimum Requirements to register a company in the U.S.

    To register a company in the U.S., several essential criteria must be met. 

    1. Minimum Number of Individuals:

    At least one person is required to register a company in the U.S. This person can act as the sole owner or be part of a group of owners (members or shareholders), depending on the chosen business structure (e.g., LLC, corporation).

    1. Registered Agent in Delaware:

    If choosing to register the company in Delaware, having a registered agent in the state is a legal requirement. The registered agent is a person or entity designated to receive legal documents, official correspondence, and other important information on behalf of the company. 

    1. U.S. Address:

    A U.S. address is required for official correspondence and legal purposes. This address can be either a physical location (such as a brick-and-mortar office) or a virtual address, depending on the nature of the business and the chosen state of registration.

    <H2> Documents required for U.S. Incorporation

    A succinct breakdown of the documents needed for the initial stages of business registration.

    1. Name Approval:

    The process for name approval is straightforward. In Delaware, you can perform a real-time search for the desired business name and immediately reserve it if available. This reservation ensures that your chosen business name is secured for your use.

    1. Director Details:

    Provide details about the directors or members of the company. This typically includes full names, addresses, contact information, and roles or titles within the company. 

    1. Number of Shares and Value Per Share

    Specify the number of authorized shares the company is allowed to issue. Also, determine the par value or the assigned value to each share. 

    <H2> Process for Company Registration in the USA

    <H2> Must-Have Documents After Incorporation

    Here’s a list of documents that a business typically receives after the registration process:

    1. Certificate of Incorporation:

    This document, issued by the state authorities, officially recognizes the establishment of the corporation. It includes important details such as the company's name, location, and date of incorporation.

    1. EIN (Employer Identification Number):

    The EIN is a unique identifier assigned by the IRS for tax purposes. It typically takes 3 to 4 weeks through standard processing, but an expedited option is available, reducing the timeline to 3 days if you already possess a Social Security Number (SSN). 

    This unique identifier, similar to India's PAN (Permanent Account Number), is necessary for various business activities, including opening a bank account, hiring employees, and filing tax returns.

    1. Bylaws of the Company (Similar to Articles of Association):

    Bylaws are internal rules that govern the operation and management of the company. They outline procedures for meetings, decision-making, and other essential aspects of corporate governance.

    In some ways, they are similar to the Articles of Association mandated in India.

    1. Banking Resolution:

    A banking resolution is a formal document that authorizes specific individuals within the company to open and manage bank accounts on behalf of the corporation. It provides clarity and legal authority for banking-related activities. 

    1. Common Stock Certificate:

    Common stock certificates represent ownership in the company. When shares are issued, these certificates are given to shareholders as evidence of their ownership stake in the corporation. 

    They typically include details such as the shareholder's name, the number of shares, and the date of issuance.

    <H2> Compliances for U.S.- Incorporated Companies

    Let's dive into the detailed aspects of compliance for businesses in the US, particularly those with C-Corporation structures and operations in Delaware.

    1. Federal Income Tax:

    The Federal Income Tax rate of 21% applies to C-corporations in the United States. They are required to file a tax return annually using the IRS Form 1120. This form outlines the corporation's income, deductions, credits, and taxes owed, etc.

    1. Withholding Tax and Related Party Transactions Disclosure:

    Similar to Tax Deducted at Source (TDS), withholding Tax in the U.S. involves deducting a portion of payments made to non-residents for services, dividends, or interest. 

    Additionally, disclosure of related party transactions is a key compliance requirement, ensuring transparency in financial dealings with affiliated entities.

    1. Delaware State Franchise Tax:

    Delaware imposes an annual franchise tax on corporations, and the amount varies depending on the type and size of the corporation. The calculation is often based on factors such as authorized shares or assumed par value capital.

    1. Delaware State Corporate Income Tax:

    In addition to federal taxes, C-Corporations operating within the state of Delaware are subject to state corporate income tax at a rate of 8.7% on income generated within the state. 

    To meet state tax obligations, C-Corporations file the Delaware Form 1100, providing detailed information on income, deductions, and other relevant financial data.

    1. Other Regulatory Compliances in Delaware:

    Beyond tax-related obligations, businesses in Delaware must adhere to additional regulatory requirements. This includes filing an annual report with the Delaware Secretary of State. 

    In a nutshell, be it India or the U.S., there will be a lot of compliances to keep a record of. By diligently meeting these obligations, you can fulfill legal mandates and contribute to a robust and trustworthy business environment.

    <H2> Incorporation in U.S. vs India

    When expanding operations from India to the United States, a common strategy involves incorporating a new U.S. company, followed by transferring shares from the Indian parent company (which must be a Private Limited Company) to the newly formed U.S. entity. The Indian company would become a subsidiary of the U.S. company, and there is no such limit to the number of subsidiaries an entity can have. 

    Keep in mind the compliances and FEMA guidelines to be adhered to during this process, which establishes the U.S. company as a subsidiary of its Indian counterpart, creating a legal and financial separation. The benefits of this approach include improved access to U.S. markets, legal autonomy for each entity, and strategic financial advantages. 

    Incorporation in the U.S.

    Company Registration in India

    Time Duration

    4-5 Days (To get a COI)

    7-10 Days (To get a COI)

    Cost 

    Ideally, it ranges around $200-500, including Government Fees, Professional Fees, etc. 

    Depends on company type, professional fees, stamp duties, etc. 

    Registered Agent 

    Required for legal correspondence

    Not Mandatory 

    Ideal for 

    If you want to raise funds in the U.S. or expand, then U.S. incorporation is advisable. 

    If your targeted market is in India, then registering your company in India is advisable. 

    Name Approval

    Simultaneous real-time search and reservation. 

    Company Name Search and Reservation happen separately

    Documentation 

    COI, EIN, Company Bylaws, etc. 

    COI, Articles of Association (AoA), Memorandum of Association (MoA), Director’s Identification Number (DIN), etc. 

    Compliances 

    Federal and state-level compliances, annual reports, IRS filings

    Registrar of Companies (RoC) filings, Annual General Meetings (AGMs), Income Tax Returns

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    View website
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    Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
    Dhaval Trivedi
    Basanth Verma
    shopeg.in
    Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
    @foxsellapp
    #razorpayrize #rizeincorporation
    Dhaval Trivedi
    Prakhar Shrivastava
    foxsell.app
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    #entrepreneur #tbsmagazine #rize #razorpay #feedback
    Dhaval Trivedi
    TBS Magazine
    Hey, Guys!
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    Thanks to Rize team for all the Support.
    It was a wonderful experience.
    CHEERS 🥂
    #entrepreneur #tbsmagazine #rize #razorpay #feedback
    Dhaval Trivedi
    Nayan Mishra
    https://zillout.com/