What are the Legal Steps to Start a Business in Gujarat, India?

Let’s start with Forbes 2010’s list of the world’s fastest-growing cities. The number three on the list is Ahmedabad. This points at the enormous scale of enterprises and opportunities available in the state of Gujarat.

Every entrepreneurial venture starts with a decision, followed by formulating a strategy. And it requires legal considerations. Once you have an idea and resources ready, the next step in starting your business is registering your company.

What’s a systematic procedure for registering a company in India?

If you’re reading this, you are probably planning to start a private limited business. In this article, we will discuss the legal steps to start a business in Gujarat.

What are some differences between Private Limited Company v/s Public Limited Company

Often large organisations with plenty of investment options opt for Public Limited Company.

In any case, the requirements to start a Public Limited Company and a Private limited company are slightly different.

E.g., the required number of directors and shareholders vary in numbers. The minimum capital fee varies. Director Identification Number (DIN) for all directors and Digital signature Certificate (DSC) for one of the directors is mandatory in the Ltd company, but not in the Pvt Ltd company.

In addition, a private limited company is not authorised to issue shares to the public or accept any form of monetary deposits from the public.

Let’s quickly go through the requirements to register as a private limited company in Gujarat:

• Check for the name availability using this website.
• A maximum of 15 and a minimum of 2 Directors are required, out of which one should be an Indian citizen.
• A maximum of 200 and a minimum of 2 shareholders are required.
• There is a minimum amount of capital. An authorised capital fee, which is a form of government fee, should be paid for minimum shares of 1,00,000 INR.
• You require an Indian address to register an office.
• Identity and address proof of all directors with their PAN cards (applicable to Indian nationals).

Legal Step for Company registration to start a business in Gujarat:

1. Digital Signature Certificate (DSC)

For Pvt Ltd company registration, the entire process is online. For that reason, it requires a digital signature certification (class II or III). There are various online portals you can use to get your DSC within a day.

2. Director Identification Number (DIN)

The intended director should apply for DIN. One director could start as many companies he wants under the same DIN. The process starts by filing DIR-3 or by applying directly through SPICe.

3. Name Approval

Once you finalise a name, you can submit it for approval by filling a form with SPICe (INC-32). In case of a rejection, you can resubmit the form or file again with a SPICe form.

On average, the approval process takes 2-3 days. For name approval, the only thing you would need is an active MCA (Ministry of corporate affairs) account.

4. Form SPICe (INC-32)

File an INC-32 application after attesting it from an advocate or a company secretary or a chartered accountant.

5. e-MoA (INC-33) and e-AOA (INC-34)

Earlier you physically filed various forms. Today, the entire process is online at MCA Portal, including the SPICe form.

The mentioned MOA and AOA forms are digitally signed before submission. Once you file all the requisite documents on the MCA portal, the registrar will allot a corporate identity number (CIN) to your company.

Document Required to start a private limited business in Gujarat:

• PAN cards of all the directors issued by the income tax department.
• Identity and address proof of the director.
• Passport size photos of directors. Each two.

Why is it important to register your company in Gujarat?

Today the process to register a business is streamlined. The entire process could be done online once you know the appropriate steps and the portals. Here are some of the benefits you gain once your company is registered.

• Your company is a legal entity. There could be a loss of personal assets due to a business decision. You could limit your tax liability by registering your company, as small businesses are entitled to various tax reductions. The legal responsibility of losses and debts of your company comes directly to you once you register your company.
• A registered brand has a higher brand value. It could greatly enhance its trust in the market, which could benefit you with the new business opportunities. Since other registered businesses prefer to deal with only registered businesses, it’s a no-brainer to have a registered brand.
• Once registered, you could also opt for raising capital for potential investors. A registered brand enables you to borrow. In addition to that, it lets you sell shares to raise capital. In most cases, raising capital is essential to business growth, and a registered company provides you with that ability.
• Large businesses often pick a registered brand when they list a supplier selection. It gives them the freedom to meet various obligations laid by customers and buyers. In that sense, registering a company fulfils the buyer’s criteria.

Registering a company in Gujarat essentially is a stress-free experience. Apart from the general benefits, there are several advantages of registering your company in Gujarat.

1. Property Ownership

Firstly, a registered company in Gujarat can buy a property under its name. That provides it with an essential feature of property ownership.

2. Limited Liability

The feature of limited liability is applied to the shareholders who are only liable to the invested amount. Personal losses or assets are not affected in case of any loss in business.

3. Transfer of Ownership

A registered brand can freely transfer the ownership of its brand from one person to another, which is not possible in the case of proprietorship. In most cases, it’s done by transferring the shares of the company from the real owner to a third party or a shareholder.

4. Perpetual Succession

Irrespective of the personal misfortunes of a member of the company, be it retirement, death, or willful resignation, the brand remains unaffected.

5. Separate Legal Entity

A registered company in Gujarat is an independent entity that is entitled to both sue and get sued by third parties. In this sense, an incorporated company has a real existence.

Conclusion

Thus, in this article, we discussed the legal steps to start a business in Gujarat, the forms and documents required for registering, and the advantages of registering a company in Gujarat. So, before you start a business, you must go through all these points to have a smooth sailing experience.

Also read:

1) Where to Get a Small Business License?
2) Legal Rights of Every Business Owner
3) What Are The Legal Requirements For Your Business Registration?
4) Ease of Doing Business in India -The Challenges & Opportunities
5) OkCredit: All you need to know about OkCredit & how it works.

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FAQs

Q. What’s the cost of registering a company in Gujarat?

Ans. The fee includes the incorporation fee and the stamp duty. There is usually no incorporation fee for a private limited company of up to Rs. 10,00,000. And the stamp duty is calculated based on the authorised share capital. E.g., in the state of Gujarat, a private limited company with a share capital of 10,00,000 INR is liable for stamp duty of 2-5K INR.

Q. How much capital is required to start a private limited company?

Ans. There are a lot of variations. Registering a company is just the start. Apart from that, you might have expenses related to office deposit, PAN and TAN charges, minimum balance in the bank, fixed deposit of VAT, and registration cost. Roughly, it might cost you about 1 lakh to erect a physical company. It might cost you way less or more, depending on your business model.

Q. Do I need a minimum investment of Rs 1 lakh to start a private limited company in Gujarat?

Ans. The old basic requirement to set up a private limited company in Gujarat was to have a minimum capital of 1 lakh Rs. It’s not the case anymore. There is no minimum capital. Apart from the cost of registering the company, you do not need much else. You could, however, show the total expense of 1 lakh rupee by the end of the year. Also, the required amount needn’t be there at the time of the incorporation. The directors can undertake to contribute their parts in a few months.

Q. How much time does it take to start a business in Gujarat?

Ans. The incorporation of a company takes 7-15 days. The division is as follows: obtaining DIN and DSC takes 2 days, name approval takes about 5 days, preparation of MOA and AOA takes 2 days, filing documents takes another day, corrections and liaison with authorities take about 3 days, and receiving final certification of incorporation takes 2 days.