Doing-Business-In-India-by-Companiesinn by BinoyChacko1


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									Guide to Setup A Business
•	 Limited	Company
•	 Limited	Liability	Partnership
Table of Contents

•	 CompaniesInn	Business	Setup	Services	                   ..........................		4
       Offline	and	Online	registration

•	 Business	Organisations:	An	Introduction	                ..........................		6
       Incorporated	Structures
       Benefits	of	incorporated	business	structures

•	 Company	form	of	Business	 				...............................................		8
       Private	Limited	Company
       Public	Limited	Company
       Company	Registration
       Concept	of	limited	liability		
       Management	and	administration	of	a	Company
       Compliance	requirements	for	a	company
•	 LLP	form	of	Business									.........................................................		14
        LLP	Registration
        Management	and	administration	of	an	LLP
        Compliance	requirements	for	an	LLP
        Why	LLP	is	a	more	attractive	structure	to	do	Business?

•	 Other	registrations	required	for	Company/	LLP							.....................		18

•	 Accounts	&	Audit							.................................................................			20

•	 Taxation							..............................................................................			22

•	 Why	choose	to	form	your	company/LLP?	.....		24
01          CompaniesInn Business Setup Services

CompaniesInn	 has	 dedicated	 team	 of	 professionals	 with	 vast	 experience	 in	 the	 field	 of	
business	 incorporation	 in	 India.	 Our	 one‐stop	 solution	 brings	 together	 all	 the	 external	
requirements	 and	 services	 required	 in	 the	 incorporation	 process	 under	 one	 roof.	 We	 can	
help	you	to	incorporate	your	company	or	LLP	or	convert	an	existing	business	into	LLP	from	
the	comfort	of	your	home	or	office.

Our	registration	process	has	already	helped	many	customers	in	achieving	quicker	turn‐around‐
times	 in	 incorporating	 their	 business	 without	 losing	 quality	 and	 that	 too	 at	 an	 affordable	
price.	 Use	 of	 standardized	 processes	 and	 information	 technology	 enables	 us	 to	 offer	 the	
incorporation	service	at	a	fee	much	below	the	usual	market	rates.	For	detailed	information	
on	our	service	charges	(inclusive	of	Government	Fees),	please	visit
Offline and Online registration
If	 you	 prefer	 face‐to‐face	 interaction	 in	 the	 registration	 process,	 we	 have	 offices	 in	 major	
cities	all	over	India	as	detailed	on	the	back	cover	page.	Else	you	can	avail	our	services	through	
phone	or	the	internet	from	the	comfort	of	your	home	or	office.

•	 For	online	incorporation,	visit	our	website	Fill	in	the	particulars	
   about	the	Company/	LLP	you	want	to	register	and	proceed	to	place	the	order.	The	well	
   explained	steps	will	help	you	complete	your	order	in	less	than	5	minutes.

•	 For	offline	registration,	fill	the	questionnaire	given	along	with	this	booklet	and	deliver	the	
    same	at	any	of	our	offices.
Our	 dedicated	 professionals	 will	 complete	 all	 the	 formalities	 to	 get	 your	 Company	 or	 LLP	
registered	anywhere	in	India.	Apart	from	incorporation	we	can	also	get	your	LLP	agreement	
customized	at	an	affordable	additional	charge.	We	can	also	help	you	to	obtain	your	business	
Tax	Numbers	(PAN	&	TAN)	and	other	Central	and	State		Government	registrations,	to	comply	
with	the	various	laws	governing	business	establishments	in	India.

This	Guide	developed	by	our	research	team	is	to	help	you	to	decide	whether	the	Company	
or	LLP	structure	is	the	right	form	for	your	business.	This	guide	will	help	you	to	understand	
the	benefits	of	Company	or	LLP	structure,	the	major	differences	between	Companies,	LLPs	
and	other	business	structures,	the	tax	benefits	and	the	basic	requirements	and	compliance	
requirements	of	a	company	or	LLP	before	and	after	its	incorporation.

For	more	details	you	can	always	write	to	us	at	or	contact	any	of	the	
CompaniesInn	offices	mentioned	on	the	back	cover.

                                                 ‐	5	‐
02          Business Organisations: An Introduction

Business	is	a	legal	organisation	designed	to	provide	goods	or	services	in	exchange	of	money.	In	
India,	we	have	several	business	organisations	such	as	Company,	Limited	Liability	Partnership	
(LLP),	Partnership	Firm	and	Sole	Proprietorship.	Basically	these	organisations	are	classified	
into	 incorporated	 and	 unincorporated	 structures.	 Company	 and	 LLP	 are	 the	 incorporated	
business	organisations	and	Partnership	Firm	and	Sole	Proprietorship	are	the	unincorporated	

Till	 2009,	 the	 only	 limited	 liability	 business	 organisation	 available	 under	 law	 in	 India	 was	
the	 Limited	 Company.	 In	 order	 to	 give	 small	 and	 medium	 enterprises	 greater	 flexibility	 in	
incorporating	their	businesses,	the	Government	of	India	has	introduced	a	new	law	for	the	
registration	of	Limited	Liability	Partnerships	in	India.
Incorporated Structures or Limited Liability
Business Organisations
Organisations	registered	under	law	and	whose	members	enjoy	limited	liability	protection	to	
the	extent	of	their	contribution;	are	very	popular	forms	for	doing	business,	all	over	the	world.	
As	the	documents	of	incorporation	and	annual	returns	of	these	business	entities	are	kept	
in	the	public	domain,	the	outsiders	dealing	with	these	organisations	are	also	able	to	know	
about	the	owners	and	their	capital	contribution	before	entering	into	a	transaction.	

Benefits	of	Incorporated	Business	Structures
All	over	the	world,	incorporated	business	organisations	are	popular	structures	for	carrying	
out	business	activities.	The	main	benefits	of	these	structures	are	given	below

•	 Personal	Assets	Protection
    Liabilities	of	owners	of	incorporated	business	organisations	are	limited	to	their	agreed	
    contribution.	It	means	a	shareholder	of	a	Company	or	a	partner	in	an	LLP	only	need	to	
    contribute	his	agreed	share.	After	he	contributes	his	share,	he	is	not	liable	to	contribute	
    additional	amount	even	if	the	company	or	LLP	creates	further	liability	in	its	name.

•	 Perpetual	Succession
    An	incorporated	business	continues	irrespective	of	change	in	its	owners.	It	is	because,	as	
    per	the	law	an	incorporated	business	is	a	legal	person	distinct	from	its	owners.	So	change	
    in	the	owners	will	not	affect	the	existence	of	an	incorporated	business.	This	is	not	the	
    case	for	a	partnership	or	sole	proprietorship.	If	a	partner	resigns	or	dies,	it	is	the	end	of	
    the	partnership	firm.	Same	is	the	case	of	a	sole	proprietorship	firm.

•	 Credibility	&	Acceptance
    Since	information	about	the	owners,	the	registered	office	and	capital	contribution	etc	are	
    available	to	public	verification;	incorporated	businesses	are	more	acceptable	to	general	
    public	and	prospective	trade	partners.

•	 Name	Protection
    An	 incorporated	 business	 is	 registered	 with	 a	 name	 and	 the	 same	 name	 will	 not	 be	
    available	for	registration	for	any	other	firm.

•	 Investment	and	Loan	availability
    Investors	always	prefer	an	incorporated	business	as	the	same	is	regulated	under	a	law.	
    Its	business	scope	and	financial	information	etc	are	available	for	verification	at	any	time.

                                              ‐	7	‐
03        Company Form of Business

Company	is	an	incorporated	business	form	with	the	liability	of	its	shareholders	limited	to	the	
amount	of	their	contribution	to	the	share	capital.	A	Company	is	managed	by	the	Board	of	
Directors	elected	by	the	shareholders.	In	India	we	have	two	types	of	companies;	i.e.	Private	
Limited	and	Public	Limited	Company.	A	company	is	a	separate	person	under	law	and	can	hold	
assets	in	its	name,	can	sue	and	can	be	sued	by	others.
Private	Limited	Company

The	main	features	of	a	Private	Limited	Company	are;
•	 Minimum	number	of	shareholders	required	for	formation	are	2	with	maximum	being	50
•	 A	Private	company	requires	minimum	2	directors
•	 Private	Company	can	restrict	the	transfer	of	shares
•	 Private	 Company	 cannot	 take	 deposits	 from	 public	 and	 neither	 can	 it	 issue	 shares	 to	
•	 Many	 of	 the	 restrictive	 provisions	 of	 the	 Companies	 Act	 are	 not	 applicable	 to	 private	
•	 Name	of	a	private	company	should	end	with	‘Private	Limited’
•	 The	minimum	capital	required	for	formation	is	Rs.1	Lac

Public	Limited	Company

Usually	 public	 companies	 are	 big	 companies	 with	 many	 shareholders	 or	 owned	 by	 other	
public	 companies.	 These	 companies	 are	 formed	 for	 pooling	 large	 resources	 from	 public,	
banks	and	other	financial	institutions.	The	main	features	of	public	companies	are;
•	 Minimum	numbers	of	shareholders	required	to	form	a	Public	company	are	7.	There	are	
   no	restrictions	on	the	maximum	limit.
•	 A	public	company	requires	minimum	3	directors
•	 All	provisions	of	the	Companies	Act	are	applicable	to	these	companies
•	 Minimum	capital	required	for	the	formation	of	a	public	company	is	Rs.5	Lacs
•	 A	public	company	can	issue	shares	after	complying	with	the	requirements	set	by	SEBI	
   (Securities	and	Exchange	Board	of	India)

Company	Registration

Any	two	persons	(in	the	case	of	private	company)	or	seven	persons	(in	 the	case	of	public	
company);	by	subscribing	to	the	Memorandum	of	Association	can	form	a	Company.	They	also	
need	to	comply	with	various	provisions	of	the	Companies	Act	for	successful	incorporation.	
The	process	of	company	incorporation	is	as	given	below,
•	 Obtain	DIN	(Directors	Identification	Number)	from	Ministry	of	Corporate	Affairs
•	 Apply	for	a	name	for	the	company	and	get	it	allotted	from	the	Registrar	of	Companies	
•	 Prepare	the	Memorandum	&	Articles	of	Association	of	the	proposed	company
•	 Apply	for	incorporation	with	the	RoC	with	the	duly	stamped	Memorandum	&	Articles	and	
    other	forms
•	 Represent	before	the	Registrar	for	correction	in	the	documents	if	required.
•	 If	all	documents	are	in	order,	the	Registrar	registers	these	documents	in	his	records	and	
    issue	the	Certificate	of	Incorporation.

                                               ‐	9	‐
Concept	of	Limited	Liability
The	 concept	 of	 Limited	 Liability	 is	 often	 misinterpreted.	 Limited	 liability	 means	 that	 the	
personal	 financial	 liability	 is	 limited	 to	 the	 extent	 of	 a	 fixed	 amount	 that	 one	 has	 agreed	
to	invest	in	a	company	or	a	limited	liability	partnership.	In	other	words,	the	investor	is	not	
personally	 liable	 for	 the	 business	 debts	 and	 liabilities	 of	 the	 Limited	 Company	 or	 Limited	
Liability	Partnership.	In	the	unfortunate	event	of	winding	up	of	the	business,	the	investor’s	
liability	is	limited	to	the	unpaid	amount	of	agreed	contribution	by	shares	or	otherwise.	On	
the	contrary,	the	liability	of	sole	proprietors	and	partners	in	general	partnership	are	unlimited	
and	even	their	personal	assets	are	exposed	to	pay	off	the	business	debts	and	other	business	

The	 Directors	 run	 the	 day	 to	 day	 business	 of	 a	 Company	 and	 are	 liable	 to	 comply	 with	
the	various	requirements	specified	under	law.	In	the	case	of	an	LLP,	Designated	Partner	is	
responsible	for	the	legal	compliances.	Directors	and	Designated	Partners	are	personally	held	
responsible	in	case	of	any	non‐compliance.

Usually	in	a	small	Company,	the	shareholders	are	the	Directors	and	in	an	LLP,	the	Partners	
become	designated	partners.	In	their	role	as	a	Director	or	Designated	partner,	their	liability	
is	unlimited,	as	they	are	exposed	to	penal	provisions	under	the	law	for	the	non‐compliance	
of	respective	regulations.
Management	and	Administration	of	a	Company
A	 company	 is	 managed	 and	 administrated	 by	 its	 Board	 of	 Directors	 appointed	 by	 the	
shareholders.	 Their	 powers,	 duties	 and	 responsibilities	 are	 guided	 by	 the	 provisions	 of	
the	 Companies	 Act	 and	 the	 Memorandum	 and	 Article	 of	 Association	 executed	 during	 the	

How	directors	function	in	a	company?
Directors	 are	 collectively	 called	 the	 Board.	 All	 major	 decisions	 of	 a	 company	 are	 taken	 at	
the	meeting	of	the	Board	of	Directors.	As	per	Company	law	minimum	of	one	meeting	of	the	
Board	need	to	be	convened	in	every	quarter	and	the	proceedings	of	the	meeting	need	to	
be	recorded	in	the	minute	book.	Board	can	also	delegate	many	of	its	powers	to	individual	
directors	and	employees	through	proper	resolutions.

What	are	the	powers	of	shareholders?
In	a	company,	the	powers	of	shareholders	are	limited.	They	have	the	power	to	appoint	or	
remove	directors.	They	can	also	vote	on	some	of	the	policy	decisions	needing	their	approval,	
as	per	the	Articles	of	Association	or	the	Company	Law.	Shareholders	take	all	decision	at	their	
meeting,	and	every	company	is	required	by	law	to	hold	an	Annual	General	Meeting	(AGM)	
every	 year.	 If	 found	 necessary	 the	 board	 can	 also	 call	 for	 Extra	 Ordinary	 General	 Meeting	
(EGM)	as	some	policy	decisions	regarding	the	running	of	a	company	can	only	be	taken	by	the	

                                                 ‐	11	‐
Compliance	requirements	for	a	Company
The	management	of	a	company	is	vested	with	the	Board	of	Directors.	The	Board	of	Directors	
manages	the	day	to	day	affairs	of	the	company	subject	to	the	provisions	of	the	Companies	
Act	and	as	per	the	Memorandum	and	Articles	of	Association.	The	decisions	at	the	meeting	
of	directors	are	carried	by	way	of	resolutions.	There	are	certain	decisions	that	require	the	
approval	of	shareholders.

The	Board	has	to	meet	least	once	in	every	3	months	and	at	least	4	meetings	shall	be	held	in	
every	year.	Every	year,	the	company	has	to	convene	an	Annual	General	Meeting	(AGM)	of	
the	shareholders	for	adopting	the	Annual	accounts	and	the	Appointment	of	auditors	for	the	
following	year.	As	per	the	Company	Law,	minutes	of	the	Board	and	General	Meetings	should	
be	 kept	 in	 the	 company	 records	 and	 the	 same	 need	 to	 be	 signed	 by	 the	 Chairman	 of	 the	

Every	company	having	a	paid	up	capital	of	Rs.5	Crore	or	more	shall	appoint	a	whole	time	
Company	Secretary	and	every	company	having	a	paid‐up	share	capital	of	Rs.10	Lacs	to	Rs.5	
Crore	shall	obtain	the	Secretarial	Compliance	Certificate	from	a	Company	Secretary	in	whole‐
time	practice.	The	same	also	need	to	be	filed	with	the	Registrar	of	Companies.

Compliance	mechanism	under	Companies	Act	mandates	filing	of	Returns	/	Forms	to	Registrar	
of	 Companies	 (RoC)	 within	 prescribed	 time	 limits.	 Compliance	 related	 filing	 of	 returns	 /	
documents	with	the	office	of	RoC	can	be	broadly	classified	into	two	categories;
      A.	Annual	Statutory	Compliances
      B.	Event	Based	Compliances

Annual	Statutory	Compliances

•	 Filing	of	Annual	Accounts:	
    Every	company	has	to	prepare	financial	accounts	consisting	of	Balance	Sheet	and	Profit	
    and	 Loss	 account	 on	 a	 yearly	 basis	 and	 the	 same	 has	 to	 be	 placed	 before	 the	 Annual	
    General	 Meeting	 of	 the	 company.	 Copy	 of	 the	 Annual	 Accounts	 duly	 audited	 by	 a	
    Chartered	Accountant	has	to	be	filed	with	the	Registrar	of	Companies.

•	 Filing	of	Annual	Return:
    Every	year	a	company	shall	file	a	return	with	the	Registrar	of	Companies	within	60	days	
    of	 AGM	 containing	 the	 particulars	 such	 as	 address	 of	 registered	 office,	 register	 of	 its	
    members,	 register	 of	 its	 debenture	 holders,	 shares	 and	 debentures,	 indebtedness,	
    members	and	debenture	holders‐	past	and	present,	and	directors	and	managing	directors	
    ‐	past	and	present.

                                                ‐	12	‐
Event	Based	Compliances
Event	Based	Compliances	The	following	are	few	instances	that	require	a	filing	of	documents	
with	the	Registrar	of	Companies.

    1.	 Change	of	Name	of	the	Company
    2.	 Increase	in	Authorised	Capital	/	Issue	of	Shares
    3.	 Creation	/	Modification	/	Satisfaction	of	Charges	on	the	Assets	of	Company
    4.	 Change	in	Registered	Office	of	the	company
    5.	 Statutory	Meeting	of	a	Public	Limited	Company
    6.	 Resolutions	passed	by	the	Board	/	General	Meetings	and	Agreements	entered	by	the	
    7.	 Appointment	of	Directors	/	Managing	Director	and	changes	among	them

Minutes	/	Registers	/	Records	and	Common	Seal
A	company	is	required	to	maintain	and	preserve	a	set	of	records	as	required	under	Companies	
Act	as	follows:

1.	 Statutory	 Registers	 such	 as	 Register	 of	 Members,	 Register	 of	 Directors,	 Register	 of	
    Directors	Shareholding,	Register	of	Charges	etc.
2.	 Share	Certificate
3.	 Minutes	Book
4.	 Common	Seal

                                              ‐	13	‐
04          LLP form of Business

Limited	 Liability	 Partnership	 or	 LLP	 is	 a	 limited	 liability	 organisation	 (body	 corporate)	 like	
Limited	 Company.	 The	 major	 difference	 of	 it	 from	 company	 is	 in	 its	 management	 and	
administration.	LLP	is	managed	like	a	partnership	firm	based	on	the	terms	and	conditions	
detailed	in	the	LLP	agreement,	giving	partners	the	freedom	to	manage	their	business	with	
minimum	outside	interference.	It	also	gives	more	flexibility	as	external	compliances	are	less	
compared	to	a	company.	LLP	can	be	formed	by	individuals	and	body	corporate	(Company,	
LLP	or	other	limited	liability	organisations).	Though	LLP	is	a	new	concept	in	India,	this	type	of	
organisation	is	very	popular	all	over	the	world.	In	USA	and	Middle	East	countries,	this	type	of	
business	(known	as	LLC)	stared	functioning	as	early	as	year	1977.
LLP	Registration
An	 LLP	 can	 be	 formed	 by	 two	 persons	 (natural	 or	 legal	 persons)	 by	 subscribing	 to	 the	
incorporation	 document	 after	 complying	 with	 other	 legal	 requirements.	 The	 process	 of	
registration	is	given	below;
  1.	 Obtain	Director	Identification	Number	(DIN)	For	Each	Designated	Partners		
       (Minimum	Two)
  2.	 Apply	for	a	name	for	the	LLP
  3.	 File	Executed	Incorporation	Document
  4.	 If	all	documents	are	in	order,	Registrar	registers	these	documents	in	his	records	and	
       issue’s	the	Certificate	of	Incorporation.
  5.	 Finalise	LLP	Agreement
  6.	 After	filing	the	other	forms	and	agreement	with	the	Registrar,	the	LLP	can	start	its	

Management	and	administration	of	LLP

Management	of	an	LLP	is	done	by	the	partners	subject	to	LLP	agreement.	Unlike	company,	
they	have	the	freedom	to	manage	the	LLP	and	can	delegate	powers	to	any	particular	partner.	
It	is	advisable	for	an	LLP	to	take	all	decision	in	their	meeting	or	by	written	consent.

LLP	 is	 a	 legal	 entity	 created	 by	 law	 and	 thus	 is	 distinct	 from	 its	 partners.	 It	 is	 required	 to	
keep	 a	 separate	 bank	 account	 for	 all	 its	 business	 transactions.	 All	 payments	 and	 receipts	
shall	be	in	the	name	of	the	LLP.	An	LLP	needs	to	keep	proper	books	of	accounts	for	recording	
business	transactions.	It	is	also	advisable	to	keep	records	of	major	business	decisions	taken	
by	partners,	either	in	the	form	of	minutes	or	in	the	form	of	written	consent.

Compliance	requirements	for	LLP

Compliance	 mechanism	 under	 LLP	 Act	 mandates	 to	 file	 Returns	 /	 Forms	 to	 Ministry	 of	
Corporate	Affairs	(MCA)	within	prescribed	time	limits.	Compliance	related	to	filing	of	returns	
/	documents	can	be	broadly	classified	into	two	categories,
   1.	 Annual	Statutory	Compliances
   2.	 Event	Based	Compliances

Annual	Statutory	Compliances

•	 Filing	of	Annual	Return:	
    Every	LLP	that	is	registered	before	Sept	30th	of	a	year	shall	file	a	return	with	the	Registrar	
    of	LLP	within	60	days	of	closure	of	its	financial	year	containing	the	particulars	such	as	
    address	of	registered	office,	details	of	partners,	designated	partners	etc.

                                                    ‐	15	‐
•	 Filing	of	Annual	Accounts.	
    Every	 LLP	 has	 to	 file	 a	 Statement	 of	 Accounts	 and	 Solvency	 with	 the	 Registrar	 of	 LLP	
    within	30	days	from	the	end	of	six	months	of	the	financial	year.
Event	Based	Compliances

Following	are	the	few	instances	that	require	filling	of	documents	with	the	registrar	of	LLP
  1.	 Change	in	the	LLP	Agreement	
  2.	 Change	in	the	Name	of	the	LLP
  3.	 Change	in	Registered	office	address	of	the	LLP
  4.	 Admission	of	Partners
  5.	 Resignation/	Death	etc	of	Partners

Why	LLP	is	a	more	attractive	structure	to	do	Business?

The	main	benefits	of	LLP	form	are;
•	 Limited	liability	protection
    Liabilities	of	Partners	In		An		LLP	is	limited	to	the	agreed	contribution.	If	X	is	a	partner	
    in	XYZ	LLP	and	if	X	agreed	to	contribute	Rs	10000	into	the	capital	of	LLP,	his	liability	is	
    limited	to	Rs.10000.	He	is	not	personally	responsible	for	the	liabilities	of	XYZ	LLP.	So	doing	
    business	through	LLP	structure	provides	safety	to	his	personal	assets	as	the	liability	of	LLP	
    shall	not	be	extended	to	his	personal	properties.

•	 Efficient	tax	saving	business	form:	
    In	the	eyes	of	tax	laws,	LLP	is	a	firm	and	hence	firm	taxation	is	applicable	to	LLP.	Various	
    taxes	levied	on	a	Company	like	Dividend	Distribution	tax	and	surcharges	are	not	applicable	
    to	an	LLP.	The	profit	after	tax	from	LLP’s	operation	will	be	reflected	in	the	personal	income	
    of	partners.	It	is	estimated	that	the	approximate	tax	savings	of	an	LLP	will	be	around	17%	
    compared	to	that	of	a	company.

•	 Management:	
    In	companies,	the	management	is	vested	with	its	Board	of	Directors.	They	are	responsible	
    for	taking	the	day	to	day	decisions	and	management	of	a	company.	Shareholders	have	
    limited	 powers	 in	 the	 affairs	 of	 a	 company.	 In	 LLP,	 management	 of	 LLP	 is	 vested	 with	
    partners	unless	specifically	mentioned	in	the	LLP	agreement.	It	is	possible	for	an	LLP	to	
    delegate	all	powers	of	management	to	a	single	person	except	compliance	requirements	
    under	the	LLP	act,	which	are	the	responsibilities	of	Designated	Partners.

                                                ‐	16	‐
•	 Less	compliance	requirements:	
    Compared	to	a	company,	the	legal	compliance	requirements	are	lesser	for	LLP’s.	For	a	
    company,	it	is	mandatory	to	maintain	various	registers,	minutes	etc,	but	there	is	no	such	
    requirement	for	an	LLP.

•	 Audit	of	accounts:	
    All	companies	are	required	to	appoint	a	Chartered	Accountant	as	auditors	for	auditing	
    accounts,	irrespective	of	the	size	and	operation	of	the	company.	In	case	of	an	LLP,	the	
    audit	requirement	starts	only	if	the	turnover	exceeds	Rs.40	Lacs	or	contribution	exceeds	
    Rs.25	Lacs.

•	 Less	cost	of	maintenance:	
    Statutory	filing	fees	payable	by	an	LLP	are	much	less	compared	to	a	company.	So	even	
    small	business	can	think	of	incorporating	their	firm	as	running	cost	are	very	low.

•	 Flexible	ownership:	
    It	is	possible	for	a	partner	in	an	LLP	to	resign	subject	to	the	terms	of	LLP	agreement.	After	
    resignation,	usually	the	partner	can	take	back	his	share	of	contribution	from	the	LLP.

•	 Management	flexibility:	
    LLP	 is	 free	 to	 take	 any	 business	 decisions	 subject	 to	 the	 LLP	 agreement.	 It	 can	 enter	
    into	 a	 contract	 with	 its	 partner	 or	 relatives	 of	 partners	 and	 borrow	 and	 make	 loans	
    to	 outsiders.	 But	 in	 a	 company	 structure,	 many	 of	 these	 decisions	 need	 either	 the	
    permission	 of	 the	 shareholders	 or	 approval	 of	 government	 authorities,	 for	 which	 the	
    process	is	cumbersome.

•	 No	ownership	restrictions:	
    In	 a	 private	 company,	 the	 number	 of	 shareholders	 is	 limited	 to	 50.	 There	 is	 no	 such	
    restriction	in	the	case	of	an	LLP.	An	LLP	can	have	any	number	of	partners	and	thus	can	
    secure	more	capital	for	its	business	operations.

•	 Greater	credibility:
    By	virtue	of	being	a	registered	entity	under	Government	laws,	registering	your	business	
    as	an	LLP,	will	gain	your	business	better	legitimacy	and	greater	credibility	when	dealing	
    with	other	companies,	banks	and	potential	business	partners.

                                                ‐	17	‐
05         Other Registrations Required for a Company/LLP

Based	on	the	nature	of	its	business,	a	company	or	LLP	need	to	take	several	other	registrations	
and	comply	with	respective	laws	of	the	Central	and	State	Governments.
•	 Permanent	Account	Number	(PAN).
   This	is	a	unique	number	issued	by	Income	Tax	department	for	tax	filing.	This	number	is	
   mandatory	for	all	incorporated	business.

•	 Tax	Account	Number	(TAN)
   This	number	is	issued	by	Income	tax	department	for	filing	Tax	Deducted	at	Source	(TDS).	
   Many	of	the	transactions	require	deduction	at	source	and	this	number	is	required	for	
   proper	compliance.

•	 Service	Tax	Registration
   If	 the	 company/LLP	 provides	 taxable	 services,	 and	 if	 the	 taxable	 turnover	 exceeds	
   Rs	10	lacs,	collection	of	service	tax	is	compulsory.	Such	service	providers	need	to	register	
   and	obtain	Service	Tax	Registration.

•	 Value	Added	Tax	(VAT)
   Value	 Added	 Tax	 and	 Central	 Sales	 tax	 registration	 is	 compulsory	 for	 companies/LLPs	
   dealing	in	taxable	goods.	It	is	a	state	matter	and	if	the	companies/LLPs	operate	locally	in	
   different	states,	separate	registrations	are	required	for	each	state.

•	 Import	Export	Code	(IEC)
   Import	 and	 Export	 Code	 number	 is	 compulsory	 for	 the	 companies/LLPs	 planning	 for	
   import	and	export	of	goods.

•	 Shop	&	Establishment	Registration
   All		the	offices	of	a	company	or	LLP	has	to	be	registered	with	the	local	labour	authorities	
   under	 the	 relevant	 shops	 and	 establishment	 Regulations.	 Generally	 this	 registration	 is	
   required	to	be	done	within	30	days	of	opening	the	respective	offices.

                                              ‐	19	‐
06          Accounts & Audit

Accounting	 is	 the	 lifeblood	 of	 any	 company	 or	 LLP	 as	 business	 decisions	 are	 made	 based	
on	accounting	information.	Company	and	LLP	law	mandates	keeping	books	of	accounts	and	
records	 in	 accordance	 with	 the	 Indian	 accounting	 standards.	 These	 requirements	 ensure	
systematic	presentation	of	accounts,	public	disclosure	and	fulfill	taxation	requirements.
Company:	Accounts	&	Audit

Every	company	needs	to	keep	its	books	of	accounts	with	all	supporting	documents	at	the	
registered	office	of	the	company.	The	books	kept	shall	be	closed	at	the	end	of	financial	year	
and	a	profit	and	loss	account	and	balance	sheet	shall	be	prepared.

After	closing	of	accounts,	the	books	and	documents	need	to	be	audited	and	shall	be	filed	
with	 the	 Registrar	 of	 Companies.	 The	 requirement	 of	 audit	 is	 applicable	 to	 all	 companies	
irrespective	of	size	and	turnover.

LLP:	Accounts	&	Audit

Like	company,	an	LLP	also	need	to	keep	the	books	of	accounts	and	papers	at	its	registered	
office.	 An	 LLP	 is	 required	 to	 close	 its	 accounts	 on	 31st	 March	 every	 year.	 The	 auditing	 of	
accounts	is	only	applicable	if	the	turnover	of	the	LLP	exceeds	Rs.40	Lacs	or	if	the	contribution	
exceeds	 Rs.25	 Lacs.	 The	 accounts	 prepared	 every	 year	 shall	 be	 filed	 with	 Registrar	 on	 or	
before	30th	October	of	that	year.

                                     ‐	20	‐
07         Taxation

The	taxation	requirements	stipulated	under	law	is	different	for	a	Company	and	an	LLP.	Few	
brief	points	regarding	the	major	differences	are	explained	in	the	paragraphs	below.
•	 For	Company
    Every	company	need	to	pay	income	tax	on	profit	and	surcharges	if	applicable.	The	profit	
    after	 tax	 can	 be	 used	 to	 declare	 dividend	 to	 shareholders	 after	 paying	 the	 dividend	
    distribution	tax.	In	simple	terms,	the	company	is	liable	to	pay	tax	on	profit	and	again	on	
    profit	distributed	to	shareholders.

•	 For	LLP
    Income	 of	 an	 LLP,	 after	 meeting	 the	 business	 expenses	 and	 partners	 remuneration	 is	
    taxed	at	such		rates	as	applicable	for	each	financial	year.	The	profit	after	tax	belongs	to	
    partners	and	the	same	is	tax	free	in	the	hands	of	partners.	Various	tax	levied	on	company	
    like	Dividend	distribution	Tax	and	surcharges	are		not	applicable	to	an	LLP.

•	 Compliance	requirements	under	Tax	law
    The	compliance	requirements	under	tax	laws	encompass	both	the	regular	payment	of	
    tax	on	the	earnings	and	filing	the	necessary	records	with	the	tax	authorities	as	per	the	
    prescribed	notifications	every	year.

•	 Annual	tax	Return	filing
    The	Company	or	LLP	has	to	file	Income	Tax	return	to	the	Income	Tax	authorities	every	
    year.	The	timeline	for	filing	the	return	is	July	31st	(incase	where	tax	audit	is	not	required)
    and	September	30th	(incase	where	tax	audit	is	required)

•	 Tax	Deducted	at	source	(TDS)
    If	 any	 Company	 or	 LLP	 makes	 any	 payments	 which	 requires	 tax	 deductions,	 the	 same	
    shall	be	deducted	and	paid	to	the	Government.	The	company	or	LLP	is	also	required	to	
    file	returns	regarding	deductions.

•	 Advance	tax	payments
    The	company	and	LLP	shall	forecast	its	tax	liability	based	on	its	income	forecasted	and	
    pay	the	tax	to	the	government	in	periodic	intervals.	

•	 Indirect	Tax
    Based	on	the	nature	of	its	business,	a	company	or	LLP	is	required	to	pay	various	indirect	
    taxes.	 For	 service	 industries	 this	 is	 in	 the	 form	 of	 service	 tax	 and	 for	 product	 based	
    industries	this	is	the	form	of	central	excise	and	Value	Added	Tax.

                                                 ‐	23	‐
08           Why choose to form your

CompaniesInn	through	its	experienced	business	setup	services	and	incorporation	consulting	
professionals	 has	 advised	 over	 5000	 companies	 and	 LLPs	 in	 the	 last	 3	 years	 in	 setting	 up	
of	their	businesses.	Our	vast	experience	in	the	legal	domain	coupled	with	the	effective	use	
of	 information	 technology	 ensures	 the	 timely	 delivery	 of	 services	 with	 high	 professional	
standards	at	an	affordable	price.	This	new	method	of	company/LLP	incorporation	evolved	
by	 our	 research	 team	 helps	 an	 entrepreneur	 to	 navigate	 easily	 through	 the	 various	 steps	  	
required	 by	 law.	 The	 following	 factors	 contribute	 to	 our	 excellent	 and	 highly	 acclaimed	
incorporation	and	compliance	services:.

•	 Experienced	team:	
    Our	 experienced	 team	 have	 the	 expertise	 to	 handle	 any	 assignment	 for	 setting	 up	 a	
    Company/	LLP	in	India.	This	includes	incorporation	of	a	new	enterprise	or	converting	an	
    existing	business	(i.e.	sole	proprietorship,	partnership	etc)	into	a	Company/	LLP.
•	 Low	cost:	
    CompaniesInn	business	setup	services	are	priced	attractively	to	meet	the	requirements	
    of	entrepreneurs	and	business	start	ups	.	Use	of	standardised	processes	and	information	
    technology	enables	us	to	provide	the	service	at	competitive	costs,	often	at	¼	the	rates	
    charged	 by	 others.	 Moreover	 our	 prices	 are	 pre‐defined	 with	 no	 hidden	 charges.	 The	
    online	price	calculator	allows	you	to	get	itemised	service	charges	including	the	standard	
    Government	fee.

•	 All	services	available	under	one	roof:	
    To	comply	with	the	various	laws	governing	business	establishments	in	India,	a	Company	
    or	LLP	needs	to	apply	for	PAN	and	TAN	Numbers	(Income	Tax	Dept.),	Shops/	Establishment	
    Registration	(Dept.	of	Labour),	Service	Tax	(Central	Excise	Dept.),	VAT	(State	Commercial	
    Tax	Dept.)	etc	depending	on	the	nature	of	its	activity.	We	can	help	you	to	obtain	all	these	
    certificates	so	that	you	can	focus	your	time	and	energies	on	operating	the	business	which	
    otherwise	might	be	ill	spent	in	follow‐ups	with	various	Government	departments.

•	 Continued	support:	
    Our	 associate	 firm	 CN Partners Consultants LLP	 has	 experience	 in	 corporate	 law	
    compliance	and	will	ensure	timely	compliance	of	your	Company/LLP’s	legal	requirements	
    at	an	affordable	price.

•	 Tax	compliance	and	accounting	services:	
    Our	sister	concern	CN Business Solutions LLP,	is	a	book	keeping	and	tax	law	compliance	
    firm.	This	firm	can	help	you	maintain	your	Company/	LLP’s	accounts	and	file	the	various	
    returns	as	required	under	law	at	an	affordable	charge.

•	 Companiesinn	Help	Desk:
    Running	a	business	as	company	or	LLP	need	professional	help	and	advise,	to	cater	this	
    we	have	our	helpdesk	for	all	our	clients.	After	incorporation,	you	can	call	any	time	during	
    business	hours	or	mail	to	for	any	help	or	assistance.

CompaniesInn	 is	 the	 ideal	 partner	 for	 your	 business	 incorporation	 and	 regulatory	    	
compliance	 services.	 When	 you’re	 ready	 to	 form	 your	 Company/LLP,	 visit	 us	 online	 at	 Fill	 in	 the	 particulars	 about	 the	 Company/LLP	 you	 want	 to	
register	and	proceed	to	complete	your	order.	Alternatively	call	us	at	any	of	the	any	of	the	   	
CompaniesInn IncorporationKiosk	 mentioned	 on	 the	 back	 page	 to	 incorporate	 your	

After	 reading	 this	 booklet,	 if	 any	 of	 your	 doubts	 regarding	 Company	 or	 LLP	 incorporation	
remain	unanswered;	call	us	or	mail	to	We	would	be	delighted	to	
provide	any	additional	information	regarding	business	incorporation	in	India.	

                                               ‐	25	‐

           Help	Desk:	+91	80	3025	5900

           Help	Desk:	+91	80	3025	5900





                  kochi LLP
#48, 100Ft Road, Opp to Kendriya Sadan, Koramangala, Bangalore - 560034

Phone: +91 80 3025 5900

Toll Free: 1800 200 9935 (Zipdial)

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