According to government records, there are a little more than 20 lakh companies which are registered in India. The Ministry of Corporate Affairs handles company registration in India. The successful registration of your company gives it a unique legal identity in the eyes of the Indian government. However, one might end up making mistakes while registering a company.
Here are some common mistakes you should avoid while registering a company
Being unaware of local business guidelines
Most of the general rules and regulations when it comes to opening and running a company have been set and governed by the Companies Act of 2013. However, there might be some additional guidelines set by the local authority of the city where your company is being registered. Hence, in addition to going through the guidelines set by the companies act of 2013, make sure to look for the local guidelines as well. Since it may not be easy for everyone to wrap their head around the mentioned rules and regulations, you may take the help of some advisors or professionals to have a clear understanding of the tax regulations and laws related to running a business.
Misspelling the company name
Filling the wrong company name or spelling it wrong in the form during the company registration in India can cause you a lot of trouble in the future. Since it is the name of the company that gets a unique identification, getting your company registered with the wrong name may cause a lot of ambiguity in the future.
Filling incorrect data
The registration process of your company requires you to provide a multifold amount of information and supporting documents. There are chances that you may fill some data incorrectly. Doing so may cause problems in the verification stage of the company registration application and can even lead to rejection of the application. Hence, make sure to double-check the information and cross-verify it with the supporting documents.
Putting redundant board of directors or shareholders for your company
The companies act of 2013 has mentioned a specific figure for the number of directors that need to be there for companies. Make sure that number of directors that you appoint for your company sticks to the prescribed figure. Also, a lot of people have a misconception about directors being by default shareholders and vice-versa. Directors play a key role in the decision-making process of the company and shareholders are supposed to share the profit and loss of the company. Both of them have a separate role to play in the running of the corporation.
Ambiguous business description
Providing an incorrect or ambiguous description of your corporation can cause a lot of trouble in the future. The description provided while registering your company should be accurate and clear as well. It should mention clearly about the voting rights of each shareholder of the corporation, types of shares, etc. Also, make sure to cover every small detail to resolve and avoid any disputes in the future. It is better to get the help of a professional since you may miss out on some points or end up describing your company inappropriately.
By outsourcing the company registration process to a credible Chartered Accounting firm, one can avoid making these mistakes and instead focus on setting up business operations.