Mayanagri or the ‘City of Dreams’ the most common name by which Mumbai is synonymous and is known to the people of India, but for many well beyond the billion strong country’s borders. Mumbai as it is claimed to be city of dreams, the claim which it states is completely true in many ways. Let us elaborate one side of it. The capital of Maharashtra and a Global city, Mumbai has emerged as a hub of startups. Almost everyone in Mumbai is a businessman. It is in the veins of Mumbaikars.
Being commercial capital of the country, Mumbai has much appeal to someone who is in search of work and better career prospects. Inhabitants from every corner of the country move to the city every day in search of a better life. The city is known for home to hundreds of legacy organizations, family businesses, large conglomerates, leading banks, financial institutions, and lately so many emerging startups.
Starting a business in Mumbai can be a turning point in your live. But there are so many formalities than one gets stuck in. That’s why we thought of bringing this article to resolve the confusions.
The article below talks about registration of business in Mumbai. It is divided into three phases, the types of business, taxation registration and the brand registration.
Types Of Business
Starting a business can be very complex if you don’t know what type of entity you should establish. Selection of business entity is among the first legal decision taken by an Entrepreneur while starting a new business. There are so many types of entities one can establish depending upon the pros and cons. Factors which are considered important while considering a business establishment depends upon Liability, Complexity, flexibility, Taxes, Control, Investment, License, and Permits etc. Given below is a brief view about the entities which you can establish.
A. Sole proprietorship
In this type of business organization, you are the sole owner, and fully responsible for everything related to business from managing all the affairs of business to all paying debts and acknowledging obligations related to your business. This type of business comes with an added advantage that all profits are yours to keep. The main disadvantage of this type of business is that you are individually liable; a creditor can make a claim against your private assets as well as your business assets in order to fulfill any arrears.
Advantages& Disadvantages:
- Easy and economical to register
- You have direct control of decision making
- All profits are yours entirely.
- Negligible working capital required for start-up.
- Unlimited liability
- Lack of continuity for your business if you are occupied in some other thing.
- Can be difficult to raise capital on your own.
B. Partnership
This type of business is created between two or more people, when the two of them come together for a common purpose. In a partnership firm, your financial resources are merged with of your partner’s resources and put into the business. The profits of the business are shared according to any legal agreement that you have mutually made.
When establishing a partnership firm, you should have a partnership deed properly executed. This is significant because it creates the terms of your partnership and can help you avoid clashes later on.
Advantages & Disadvantages:
- Easy and low-cost to form.
- Costs are shared equally with you and your partner(s)
- Equivalent share in the management, profits and assets.
- There is no legal distinction between you and your business
- Unlimited liability
- High possibility of conflict between partners
- One partner is held financially responsible for business decisions made by other partners.
C. Limited Liability Partnership
Limited Liability Partnership is a form of business operation which merges the structures of a partnership and a corporate. Limited Liability Partnership (LLP) is a progressive form to old-style form of partnership having benefits of limited liability of partners and perpetual succession. A Limited Liability Partnership can be registered with the Ministry of Corporate Affairs of India. A Limited Liability Partnership is for businesses, both small and large, not willing to raise funding, from the general public.
Advantages & Disadvantages:
- Separate legal existence
- Easy and low-cost to form.
- Costs are shared equally with you and your partner(s)
- Limited liability except in the cases of fraud
- A LLP must have at least two partners. If one partner chooses to leave the partnership the LLP may have to be dissolved.
D. Private Company
A private company is an organization held by private individuals for small businesses.The company which may have shareholders, but their stocks do not trade on public exchanges is a Private Limited Company. A type of company that provides limited liability for its shareholders but that places certain limitations on its ownership. The liability of the shareholders of a Private Limited Company is limited to the amount of shares held by them.
Advantages & Disadvantages:
- Limited liability
- Continuous existence
- Separate legal entity
- Vast records required, including documentation filed annually with the government
- Possible conflict between shareholders and directors
E. One Person Company
One Person Company is a fusion of Sole-Proprietor and Company form of business. The Companies Act, 2013 brought in the new concept of business that is the model of One Person Company, thereby enabling a Person who is carrying on the business in the Sole-Proprietor form to enter into a Corporate outline with concessional/relaxed requirements under the Act. In the former Companies act 1956 a minimum of two directors and shareholders were requisite to form a private limited company. However with the new Companies Act 2013, as per Section 2(62), a company can be formed with just 1 Director and 1 member.
Advantages & Disadvantages:
- Limited liability protection to directors and shareholders
- Continuous existence
- Easy conversion
- Difficulty in capital expansion
- Less business credibility
GST Registration
The second thing which has to be kept in mind while starting an establishment is its tax procedures. In earlier days while starting with an innovative business in India, one had to get VAT registration from the State’s Sales Tax department. With different procedures and fees for VAT registration in every State, it was hard to set up multiple States businesses.With the execution of GST in India, the procedure for GST registration centralized and standardized the process of tax registration. Under GST system, businesses now no longer have to obtain multiple VAT registration as a single GST registration is applicable across India. Businesses whose revenue surpasses Rs. 20 lakhs are required to register for GST. This process of registration is called GST registration. For certain businesses, registration under GST is compulsory.
So with the enactment of GST, taxation procedures for business have been simplified and now a multi-state business can be established easily.
Brand Registration
The next and most important step for registration of a business is creating an impact. Creating an identity different from others especially in the field of business and trade can be a tough task. Launching new business or services and you believe them to be unique and different from others and want to get benefits of the same, register for Trademark so that others won’t be able to use it without your permission.
A trademark (brand name) in layman’s language is a mark, sign or symbol which can be a word, sign, name, label, numeric value or combination of colors or unique business name, catchy phrases, taglines or captions used by a person on products or services or any other article of commercial business to distinguish it from other similar goods or services available in market. Owner of trademark gets exclusive rights to use the registered mark in relation to the categories they are registered in. So if you want your business to rise and shine, get your brand trademarked.
Conclusion
Mumbai being a city of corporates, the most suitable form of business that people can establish is Private Limited Company. Private Limited Company has an added advantage as it has its rules and regulations properly framed in Companies Act, few people can join hands together and can start a company. A company has a legal entity and is in existence till it is wounded up. So we suggest you to go for a Private Company as it is the most suitable form of business organization.
Afleo is a leading solution provider w.r.t various necessary registrations for start-ups across entire India namely IEC , MSME, FSSAI, APEDA,GUMASTA, GST etc. Not only this but Afleo offers legal services such as Company registrations including OPC, Pvt Ltd., Section 8, NBFC etc as well deals with IPR services relating to trademark.
Let’s just say, you name the service and Afleo is there for you.
In case if you have any doubts while establishing your own business, feel free to contact us, we at Afleo are always there to help you.
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