10 Myths About Company Registration | How much of it is TRUE!

 

As it provides numerous benefits, company registration online is a logical first step in the foundation of any business. The vast majority of businesses in India are sole proprietorship or partnerships, even though registered businesses gain far more than unregistered businesses.

 

More than ever, it is vital to stress the significance of completing company registration, given the proliferation of start-ups across the nation. 

 

Due to several myths and misconceptions about the business registration process, Indian entrepreneurs are cautious to adopt the corporate structure. 

 

We will disprove the top 10 myths about the process of forming a company in this article.

 

We have chosen some of the most prevalent company registration myths in India because we want to show the truth about what is legal. 

 

To avoid making any costly mistakes, it is essential to understand how the law affects your organisation.

 

Myth 1 - Incorporating a business requires having a physical location.

 

In a residence, you may lawfully register your business. Many business owners are ignorant of their legal right to legally establish a private limited company on any residential property. 

 

The Companies Act of 2013's provisions states that there are no limitations on corporate law that forbid the registration of new firms in residential areas. 

 

But at every location where it does business, a firm must display its name and the registered address of its office.

 

Myth 2 - Applicants must present original documents.

 

Scanned copies, fully authenticated by the applicants, are accepted. Many con artists take advantage of entrepreneurs by forcing them to provide all of their original papers during the company registration process. 

 

It is an attempt to trick and cheat unsuspecting business owners who are uninformed of the true procedure. 

 

Original legal documents are never required throughout the company incorporation process.

 

Myth 3 - GST registration is required.

 

GST registration is not required, which is a common misperception. Only people who perform taxable services are required to apply for GST registration. GST registration is not necessary if the annual turnover does not reach the government-set level; this allows small-scale service providers to benefit from GST exemption.

 

Myth 4 - A minimum annual turnover is necessary for company formation.

 

There is no minimum level of turnover or sales required to register a firm. A new business with little to no sales and little to no revenue can also register.

 

Myth 5 - Allocating shares to directors is required for company formation.

 

It is a fallacy that all directors of a corporation must own stock. Shareholders who have put money into a corporation do not have to be directors. Similarly, corporation directors are not required to own stock in the company.

 

Myth 6 - The tax rate applicable to private firms is disadvantageous.

 

The tax rate applied to private corporations may be higher than that of an individual trader or partnership firm. The tax on corporate entities, on the other hand, is computed after deducting expenses from income. 

 

This benefit does not apply to sole proprietorships or partnerships. Furthermore, increased tax deduction allowances have been made available to registered corporations.

 

Myth 7 - Only humans can make investments in businesses.

 

It is incorrect that only humans can be firm owners or shareholders. According to the legislation, a corporation is an artificial person, and so an incorporated corporation can invest in the stock of another corporation.

 

Myth 8 - A company's share capital must be deposited in a bank at the moment of incorporation.

 

 

A private limited partnership allows for a great deal of leeway. 

It is not required for a company's share capital to be placed in a bank at the moment of incorporation. 

 

Similarly, after your company is incorporated, you can make changes to its capital, business, official address, and other details as of that day.

 

Myth 9 - Company maintenance is expensive.

 

It is a fallacy that corporate upkeep is prohibitively expensive. When it comes to accounting, compliance, and tax filings, there is just a small outlay of money.

 

Myth 10 - A company's registration must be renewed every year.

 

It is not necessary to renew your company's registration every year. Your firm just has to be registered once. 

 

Furthermore, unless it goes through the formal process of shutting up, your company will be registered with the MCA in perpetuity.

 

Conclusion

Finally, do not be misled by myths and misconceptions; instead, conduct your own research through legitimate and authentic outlets. 

 

StartEazy provides comprehensive and credible information on company registration. Furthermore, our company registration online service is both practicable and cost-effective. Contact us immediately to receive first-rate legal assistance from our knowledgeable professionals.

 

Certain factors, like as size, fund-raising requirements, and the scale at which you wish to start your business, must be considered when determining which business structure is best for your company. 

 

Private limited companies must comply with more regulations than partnerships, but they provide more security and certainty than any other form. 

 

It is well-organized and has a better credibility than the other structures, allowing it to attract investors, obtain bank loans, and raise capital. 

 

As a result, despite certain myths and compliances surrounding it, one should not ignore this structure and make an informed selection before concluding the business structure for company incorporation.