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Top 6 Company Formation Myths

There are numerous misconceptions regarding company registration. Whether you use a company formation agent or the registrar of companies directly, registering a company in India need not be difficult. In fact, the exact opposite is true!

A business can often be up and running in a day, or even just a few hours, depending on the situation. Some of the most prevalent myths about company formation will be dispelled in this article.

1) It Costs a Lot to Register a Business This is simply not true. A small government fee is required to register a company at the registrar of companies. This will be documented if a company formation agent is utilized. By using our website to register a business, you can get a complete set of statutory company documents for a low fee.

Naturally, running a business can come with ongoing expenses. These will vary in size depending on the kind of business.

2) A company can be registered by anyone In many instances, this would be true, but it is not entirely accurate. Who can be appointed as a company director has very few restrictions. However, directors must not only be over the age of 16 but also not be “undischarged bankrupts” or otherwise ineligible for the position.

3) It Takes a Long Time to Register a Company Traditionally, a company was registered by sending paper forms to the Company Registrar via postal mail. If there are mistakes on the forms that need to be fixed, this process may take weeks or even months.

Even though companies can now be registered online, it is still possible to register a company in this manner.

4) All personal information will be made public One of the main reasons to do business in India is the public company register’s emphasis on corporate transparency. Investors, customers, employees, and other businesses alike gain confidence in Indian businesses as a result.

Nevertheless, for a variety of security reasons, some information cannot be made public. The public register lists a company’s registered office address as well as the service address of a director or PSC. However, it is not required by law that this be the individual in question’s home address. This could be the address of a service provider like us or an accountant.

5) Issuing a large number of shares is preferable It is a common misunderstanding that the “real” value of a private limited company is related to the “nominal” value of the shares that are issued. The fluctuating value of publicly traded shares for public limited companies, which does, in fact, reflect the perceived “real” value of a company, may contribute to the confusion.

In a private limited company, the number of shares is simply used to describe the ownership structure. A nominal value of one share may be allotted to two equal shareholders to reflect their equal ownership.

A shareholder is only responsible for the nominal value of the shares they own. It is not a good idea to issue too many shares because doing so simply puts the shareholder at unnecessary risk.

6) Any Company Name Is Acceptable There is a Moderate Degree of Flexibility Available When Selecting a Company Name However, there are some restrictions and rules that must be taken into account. It is not possible to register a name that is too similar to a name already in use for a business, use a protected term or phrase without permission, or register a name that people might find offensive.

Putting aside the myths and misconceptions, it is time to begin!

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