Operating an unregistered company in India is strictly illegal, if found people may face heavy penalties, fines, and legal actions.
Without proper registration businesses or companies fail to leverage several key services that need to run a company like bank accounts, fundings, advertisements, and more.
In addition to this they could also face issues related to tax compliances because the company fails to register for GST or tax related benefits.
To avoid these issues and legal consequences it’s better to register your company at its earliest to operate hassle free. In this article we will see what happens if you don’t register your company in India.
Consequences of Not Registering a Company In India
Unregistered businesses in India could potentially result in huge legal, financial, and operational repercussions. They are not recognized legally and thus create definite difficulties in enforcing contracts, intellectual property protection, and disputes resolution.
The main example is that registered partnership firms do not have an option of suing their co-partners or third parties for cases of law violation, the same way third parties can also sue them without restrictions.
Such business houses also do not qualify for government schemes or tax benefits and usually have many challenges attracting funds from investors or financial institutions.
Registering a Company With MCA?
Company registration in India is done by the MCA (Ministry of Corporate Affairs) under the companies ACT, 2013. This process gives you a certification to run your company legally in India. The process includes gaining a digital signature certificate along with directors identification number. This registration provides transparency, legal benefits, and limited liability.
Legal Benefits of Registering Your Company in India
Here are some legal benefits of registering your business in India as follows:
Separate Legal Entity
Upon registration, it acquires the status of a separate legal entity distinct from its owners (the shareholders) and directors. The company has rights: to own property, enter contracts, and to sue or be sued.
Limited Liability Protection
Shareholders of a registered company enjoy protection against any liability arising from the company, only to the extent of their investment. This means their personal assets are largely protected from the debt collections of creditors, unless in cases of fraud or such wrongful conduct.
Perpetual Succession
The company shall go on irrespective of the changes in its shareholders or directors. This provides assurance to plan for the long term without disruption.
Credibility and Trustworthiness
Registered companies enjoy more credibility and are more trustworthy in the eyes of customers, investors, and financial institutions. This makes it easy to raise loans, attract investments, and enter into partnerships.
Compliance with laws
Legality is ensured on the condition of registration under the Companies Act, Income Tax Act, and GST Act by a company’s operation. Not in terms of fines, but in terms of litigations that arise out of an obligation of compliance.
Tax Benefits and Inhibitions
Different tax exemptions and deductions under Indian tax laws are available for registered companies. They would also be entitled to some government schemes and other financial incentives with respect to subsidies.
Access to Capital
Capital may be raised through the issuance of shares, debentures, or even raising venture capital and private equity funding only by the registered entity. Such facilities could widen opportunities for the growth and business development of an organization.
Protection of Intellectual Property
Allowing the company to secure its intellectual assets including trademarks, patents, or copyrights against ensuring that its brand and ideas are subject to a legal safeguard.
Ability to Enter Contracts
A registered company is legally entitled to enter into binding contracts and agreements with its customers, suppliers, and other businesses. Such contracts are thus enforceable under Indian law.
Regulatory Amenities
Therefore, registration gives a company the opportunity to access government tenders, supply contracts, etc., resulting in regulatory benefits. It also enables access to international trade agreements and prospects of exports.
Understanding Business Registration Process Online
The process of registering your business online in India is not very simple nor very complex. The only thing needed is that you can understand the complete process without making any mistakes as it includes various steps to go through.
To make it simple for you I have already provided a blog dedicated to a simple step to step guide on how to register a business online in India. Which covers every single detail including process, eligibility, documentation, fee structure and more.
Top Mistakes to Avoid During Company Registration in India
Here are some of the key mistakes to avoid while registering your company in India:
- Choose a business structure wisely between Private limited and LLP after weighing the goals, scale, and future plans of your business to avoid hassles later.
- Get all documents, i.e., identity proofs, address proofs, and company agreements, completed in full and free from errors to avoid avoiding exorbitant delays or rejection in the treasury of registration.
- Check the availability of your business name with the MCA portal to make sure it is unique and not registered by any other person. Otherwise you may face legal suits in future.
- Register for GST at earliest and obtain licenses that are essential to your business or industry to avoid complications and penalties.
- Take help from professionals like Regible Corporate Consultant to avoid any mistakes in any types of process related to your company or industry.
- Last and final trademark your brand name or company name to ensure transparency or avoid conflicts with any other business entities.
To Sum Up
There are many legal risks of running a non registered company in India, but we can avoid this by registering our company as quickly as possible to avoid facing any legal consequences.
Here Regible Corporate Advisor LLP will help you fast forward your process by providing the legal aid to complete your company registration process in Guwahati Assam or anywhere in India. They are a prominent company registration consultant in Guwahati providing service at very cost effective charges and smooth process.
Frequently Asked Questions:
Can I run a business without registering with MCA?
Yes there are some businesses you can run without having to register it with authorities but it is advisable to register to claim financial benefits.
How can I start an online business without registration?
You can start an online business as a sole proprietorship or as a freelancer in that there is no need for any registration.
Can I run a small business without registration?
Yes you can run a small business without registration but this will exclude you from taking any legal benefits or financial benefits from the government.
What types of businesses can I run without having to register?
Freelancing, consulting, content creation, tutoring, and many more businesses you can run or do without having to officially register it.
Is it legal to register company with coworking address?
Yes absolutely, it is legal to register your company with a coworking address as long as the coworking provider permits you to do it.
