(This article was published in the bimonthly newsletter of Electrical Technocrats Association – E.T.A)
Legal formalities are very important for any organisation to function smoothly. The type of legal formalities varies according to the nature of business and the type of registration of the organisation.
Any firm has to be registered unless it is a governed by a sole proprietor. The various types are explained here.
Partnership firm
In case of a partnership, minimum two partners have to be involved. The basic details that will be required are each partner’s residential details, share of the capital invested, profit/loss sharing ratio, duration of business, nature and place of business, jurisdictional centre, any other terms and conditions.
This can be done through a lawyer and the total expenses for this including lawyer fee may vary between Rs. 4000 to Rs. 6000.
Private Limited
A minimum of two are required as directors and two as shareholders. The maximum number of shareholders can be 50.
The directors have to obtain a Digital Signature separately. The fee of registration varies based on the total initial investment. For a investment of around Rs. 1 lakh, the expenses may be around Rs. 35000 to Rs. 40,000 including the fee to the lawyer.
Public Limited
It is said that a minimum capital of Rs. 1 crore is required to register as a public firm. Since this is not sought by almost any of the entrepreneurs in the initial stage, let me not dwell much into this.
Of late, there is another form registration that been introduced, which is similar to registration of a partnership firm.
Apart from the company registration, other legal procedures involve tax registrations.
TIN (Tax Information Network) number has to be obtained if the business is offering products. “C” Form is required in case of trading a product across states. Service tax registration has to be done in case of service oriented business. There is a threshold limit for the revenue to pay such taxes.
This article gives only a gist of legal aspects. There are lot more to it. Interested readers can contact me or do a web search to learn more.
Let us look at the ways to raise funds in the next newsletter. Till then, keep your feedback posted.
The author is the Founder & CEO of Ulaginoli Energy Solutions and can be reached at boniface@ulaginoli.com or +91 9884342050