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
Benefits of incorporated business structures
• Company form of Business ............................................... 8
Private Limited Company
Public Limited Company
Concept of limited liability
Management and administration of a Company
Compliance requirements for a company
• LLP form of Business ......................................................... 14
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 Companiesinn.com 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 www.companiesinn.com.
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 www.companiesinn.com. 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 email@example.com or contact any of the
CompaniesInn offices mentioned on the back cover.
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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
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.
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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)
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
• 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.
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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
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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.
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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
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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.
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
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.
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• 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.
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.
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• 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
• 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.
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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
• 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.
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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.
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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.
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08 Why choose Companiesinn.com 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
• 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 firstname.lastname@example.org 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
www.companiesInn.com. 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 email@example.com. We would be delighted to
provide any additional information regarding business incorporation in India.
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Help Desk: +91 80 3025 5900
Help Desk: +91 80 3025 5900
#48, 100Ft Road, Opp to Kendriya Sadan, Koramangala, Bangalore - 560034
Phone: +91 80 3025 5900
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