Top Reasons Why Startups Struggle with Company Registration in India

When someone starts a business, they have to tackle many challenges, from planning a business to getting a license or registering a company in India. Dealing with company registration is not just a legal formality that one has to take care of, but it also acts as the foundation for the success of the business. 

To tackle all the problems with registration and get all the benefits, there comes the need to get help from a professional business registration consultant who can smoothly manage all the requirements and processes of company registration. Startup registration services provided by business consultancy services help a businessman with the process in an easier, faster, and error-free way.

In this blog, we'll explain to you the common challenges that an entrepreneur has to face during company registration and how professional services providers can help you overcome all the hurdles related to registration.

Section 1: Documentation Issues

Documentation is an important step that one has to complete to gain consciousness. Many startups and entrepreneurs have to face challenges when dealing with company registration and complex legal requirements to get a GSTIN number and company registration. If any document is missing, outdated, or incorrectly formatted, the Registrar of Companies (ROC) will reject the application, and again, you have to file an application. 

Some important documents you have to take care of are the:

> PAN (Permanent Account Number) of all directors and shareholders. 

> Aadhaar Card for identity proof

> Proof of Business Address, and this could be a utility bill, rent agreement, or ownership document 

> passport-sized photographs, 

> Digital Signature Certificate (DSC) 

> Director Identification Number (DIN)

Arranging these documents on time and in the right order can be a task, especially if you're not familiar with the process; here if you get help from business registration consultant professionals, they will ensure that every document is properly prepared and formatted, will reduce the chances of rejection and can save your time and money. The right structure of registration form and documentation required and compliance with legal norms, ensures the smooth running of the business and helps in minimizing risks that will attract investors or customers and can add to profit.

Section 2: Choosing the Right Business Structure

Before starting or making registration, an entrepreneur has to choose the right business structure, as every business structure has its own advantages and disadvantages. Many entrepreneurs get confused about deciding which type of business structure will perfectly match their needs. They have many questions in their mind, like whether they should have to go for a Private Limited Company, Limited Liability Partnership (LLP), or Person Company (OPC).  When we talk about a Private Limited Company, it suits those startups who are planning to raise funds, with limited liability protection and a separate legal identity. 

A limited liability partnership is suitable for small businesses or professionals who want limited liability but want fewer compliance requirements than a private company. And when you have enough funds to start the business and have all the business management skills, then a person company suits you. It is the best choice for entrepreneurs who want a separate legal identity but don't want the complexity similar to a private limited company.

There is a risk in choosing the wrong structure as it can lead to higher taxes, more compliance, or limitations in growth. Here, a professional consultant will analyse the business model, growth plans, funding needs, and long-term goals and then recommend the right structure that will help the business to grow in the long term. A registered company in India can explain the advantages and disadvantages of each business structure with their experienced professionals and can save entrepreneurs from costly losses due to mistakes, and save time while giving them peace of mind at the same time.

Section 3: Legal and Compliance Barriers

In a company registration process, there are several steps that one has to follow, rather than just filling out registration forms. Several legal and compliance steps can create confusion for entrepreneurs if they don't have the proper knowledge and are not updated with the changes.

The first step is to draft the MoA and AoA. The Memorandum of Association (MoA) and Articles of Association (AoA) are the main legal documents in which you have to define your company’s objectives, rules, and internal governance. Drafting them incorrectly can lead to legal troubles in the future. If there is a mistake in MoA then one may not be allowed to operate in certain sectors. However, legal professionals can analyse your business and help an entrepreneur draft these documents correctly and ensure that they comply with the Companies Act 2013 to avoid any problems in the future.

The second important steps are ROC Filings, DIN, and DSC Processing. Filing documents to apply for the ROC can be confusing, especially for new entrepreneurs, as they are new to all the rules and regulations. They have to apply for a Director Identification Number (DIN) and Digital Signature Certificate (DSC), and filling out the SPICe+ form for incorporation requires precision. 

Errors or omissions in these documents can lead to rejection or resubmission of the form, and will end up delaying the processing time and money of an entrepreneur. A professional services provider can efficiently handle these filings and ensure compliance that reduces the chances of delays and saves time while eliminating the chance of any omission or mistakes.

Section 4: Delay in Government Approval

There may be delays in the process even if your documents and filings are correct and perfect, and delays in government approvals mean delays in the upcoming process and a waste of money, effort, and time. 

Delays in the process may happen due to high workloads at government offices, incomplete applications, or errors in forms. It may also be due to incomplete or incorrect submissions. Name approval issues, especially if your company name is too similar to an existing one in the market, manual errors during processing at the ROC, due to Government holidays, or system downtime.

Experienced consultants have experience and know how to navigate these challenges, so they ensure that all forms are error-free, follow up with the ROC, and address any queries promptly, which can eliminate the chance of any delay in the process. Many professional firms also have direct communication channels or contacts within the ROC offices that help speed up the process and complete the process on time. This will give peace of mind to the businessman.

Section 5: Benefits of Using Professional Registration Services

Here we have explained how taking help from a professional services provider can make the process smoother and efficient.

Streamlined Process

A professional services provider can handle end-to-end document requirements for registration. They can guide you in document preparation and help you select the right business structure, draft legal documents, file applications, and handle follow-ups. This will help an entrepreneur save time and effort while helping to focus on the main key areas of your business for growth in the long term.

Legal Compliance and Support

Professionals have years of experience and keep themselves up-to-date with the latest legal requirements changes that will ensure your registration is fully compliant and the registration process can be completed on time and more smoothly or in an efficient way. They also help an entrepreneur with post-registration formalities like GST registration, opening a bank account, and obtaining other licenses.

Post-Registration Services

The formation of a company is just the beginning of the further documentation requirements with the growth of the business and the beginning of upcoming challenges that have to be dealt with in the long term. Entrepreneurs have to meet many requirements, like annual filings, tax filings, and board meetings. Many service providers offer packages that include post-registration compliance support that will also help you to run your business without any tension and worry.

Conclusion

When there is proper guidance from a business registration consultant, professionals who have years of experience can help a business to grow in the long term without any worry regarding the legal actions taken by the government. By taking help from experts, you can ensure that your company is set up correctly, compliant with legal norms, and ready for growth. 

A startup founder or entrepreneur must ensure that documentation, legal complexities, or delays never hold them back, and startup registration services provided by a registering company in India can guide them in navigating through the registration process and post-registration challenges that help them to focus on other important work of their business.

FAQs:

How long does company registration take in India?

Company registration in India takes 7-15 working days for company registration but can change depending on the type of company and other factors like government processing times, the accuracy of your documents and the availability of employees in government offices.

What documents are required for company registration?

The important documents for company registration are a PAN card, Aadhaar card, proof of address for all directors and shareholders, proof of registered office address, passport-sized photos and utility bills or NOC from the property owner if needed in some special cases.

Can I register a company online in India?

Yes, you can register a company online in India, and the entire process of company registration in India can be completed online by visiting the Ministry of Corporate Affairs (MCA) portal or using digital signatures and e-filing.

What’s the cost of professional registration assistance?

The cost of professional regulation assistance can vary according to the type of company and the services offered. The starting cost, in some cases, ranges from Rs. 5,000 to Rs. 25,000 for end-to-end assistance.

Is it mandatory to hire a CA or CS for company registration?

Legally, it is not mandatory to hire a Chartered Accountant (CA) or Company Secretary (CS), but hiring them can be a good decision as they guide and help you to ensure compliance, accuracy, and smooth processing, especially for private limited companies and LLPs.