Company Registration in Delhi: Advantages and Disadvantages

What is Company Registration in Delhi?

The process of Company Registration in Delhi is easy and important for new companies. Delhi is considered one of the best places in India to incorporate a new company. It becomes more popular among the business owners and startup enthusiasts to get new company registration done in the prescribed procedure. This gives them an extra advantage of being government recognized and entitles them to any scheme or tax benefits provided by the state or the central government. There are certain types of Companies that can be registered in Delhi. These are:

  • Public Limited Company
  • Private Limited Company
  • Unlimited Company
  • Partnership Company
  • Limited Liability Partnership (LLP)
  • Sole Proprietorship
  • Branch Office
  • Joint Venture Company
  • Subsidiary Company
  • Liaison Office
  • Project Office

Advantages of Company Registration in Delhi:

Registering a company has been a priority for most of the business owner nowadays as it is packed with a lot of benefits. The advantages of having Company Registration in Delhi are as follows:

  • It gives a separate legal identity to the company – Company registration in Delhi means that the company will have a legal identity. This can be really beneficial as the company will be entitled to receive the subsidiaries and tax benefits provided by the government.
  • It gives the company an easier access to the capital – As the company can register in the stocks exchange and issue the stock shares, it becomes easier for the company to raise capital and funds from the market or bank.
  • It gives the company the power to sue – The legal entitlement of the company gives it the power to sue the other person or company in case of infringement or fraud or forgery.
  • It gives the company a right to hold a separate property as well–As the company has its own separate legal entity; the law allows it to own a property on its own name.
  • It gives the company a perpetual succession or continuous existence – Company Registration in Delhi provides the company a continuous existence until the winding up of the company as per the legal provisions. The membership of the company can change with time but that has no effect on the existence of the company in the long run.

Disadvantages of Company Registration in Delhi:

In spite of so many benefits and advantages Company Registration in Delhi does have its share of disadvantages and loopholes. These are:

  • It removes the possibility of personal ownership – In case of share holding company; the owner does not enjoy complete ownership.
  • It can bear a cost – The process of Company Registration in Delhi includes fees payment for registering and other payments like fees for legal consultation, chartered accountant consultation etc.
  • It implies the company to have a required structure – It becomes necessary for the company to have a structured business with management, operational component and accounting practices.
  • It makes it difficult to dissolve the company – Registration can be a boon but it can be a problem as well at the time of dissolution of the company. It requires time and money to dissolve a registered company and has a set of legal provisions to be followed during dissolution.
  • It multiplies the ongoing paperwork – With registration of company comes various other registrations like for Goods and Services Tax, stock exchange, etc. this makes a lot more paperwork for the company. It has to file annual returns and pay taxes on time.
  • There is implication of double taxes – Sometimes, a particular type and nature of company might have to pay more taxes than the usual during incorporation, registration or even while doing business.
  • It can be sued as well – Companies legal identity makes it a target for suing by others as well if the company is involved in some kind of illegal activity or fraud or etc.

Lifting the corporate veil is required – The company, is always considered a separate and distinct from its members which implies that in some cases and circumstances the whole entity can be at risk with a wrongdoing of just one member.

Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.