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

Maharashtra is the country's financial capital, and people from different states come here to start a business. So, the state offers a business-friendly environment where several ventures, including start-ups and other large companies, can thrive. As the country's manufacturing hub, the state also boasts highly talented and qualified professionals and a well-developed infrastructure.

Besides the manufacturing sector, in recent times, Maharashtra has also opened its doors to several other small businesses and start-ups. So, if you want to start a small business in Maharashtra, here are a few tips that you can follow to help you set up a thriving venture.

How to Start a Small Business in Maharashtra?

There are several small ventures that you can start in Maharashtra in various domains like textile, organic fruits and vegetables, fast-food joints, tourism, real estate, and more. The start-up costs for each of them vary, but more importantly, you should know the steps you need to take to incorporate your small business. That is, establish a company or firm in any of these areas.

Before you even think of incorporating your small business, you must complete all the legal formalities. So, here are the legal steps to start a business in Maharashtra.

Legal Steps Required to Incorporate a Business in Maharashtra

You need to take some legal steps before you can start a small business in Maharashtra. When it comes to the legal formalities for starting a small business, there are three things that you should keep in mind: the requirements, the procedure, and the documents. Let's explore each in detail.

1. The Requirements

To start a small business or company in Maharashtra, you must meet the minimum requirements or the eligibility criteria that vary depending on the company or business sector. Now, there are two types of companies that you can start: Private Limited Company and Public Limited Company.

Private Limited Company

If you want to start a Private Limited Company, you should ensure that it has at least two directors and an Indian citizen. Also, note that the Company cannot have more than 15 directors.

Similarly, a Private Limited Company should also have at least two shareholders, but not more than 200 shareholders. You should also raise enough capital for your venture and ensure that you pay up at least Rs—1 Lakh as authorised capital to the Government.

It is mandatory to have your headquarters or any other registered branch in an Indian city, although you can also have offices elsewhere in the world.

Note that as a Private Limited Company, you are not allowed to accept deposits or issue shares to the public.

It is also compulsory for all the directors of a Private Limited company to have their PAN cards with them all the time, along with another valid Government identity proof.

Public Limited Company

A Public Limited Company requires at least three directors and seven shareholders. All the directors must have valid Government identity proof and a PAN card. Besides these, all the directors of a Public Limited Company should also have a unique identification number called Director Identification Number (DIN).

First introduced between Sections 266A and 266G under the Companies (Amendment) Act, 2006, DIN is a unique eight-digit identification number that the Government allots to the directors of all the Public Limited Companies. DIN has lifetime validity, meaning that you don't need to renew it at any point during your tenure as a director. Also, each person gets only one DIN but can be the director of multiple organisations or businesses.

All the companies in India must get their Director Identification Numbers (DIN) within the prescribed time frame. Also, whenever a company director signs a document related to its business activities, they must mention their Director Identification Numbers and signatures.

The other requirements for registering a Public Limited Company are that you should be an Indian citizen and have a registered office within a city in India.

You should also know that as a Public Limited Company in India, you are required to pay up an authorised capital of Rs. 5 lakhs to the Government.

Additionally, any directors must have a valid Digital Signature Certificate (DSC) that authorises them to sign documents electronically.

2. The Procedure

You need to follow some legal steps for starting a business in Maharashtra that form part of registering a company. In a typical situation, the process for registering your business consists of five steps.

Step 1: Getting the Digital Signature Certificate (DSC)

If you register a Private Limited Company, you should know that it is an online process to need a digital signature. You already know that all the company directors must have a valid Digital Signature Certificate (DSC). So, the first step you must take towards registering your company or business is to get a Digital Signature Certificate.

The time taken for getting a DSC depends on several factors. Various organisations provide Digital Signature Certificates, and the time required for processing them is different for each of them.

Step 2: Getting a Director Identification Number (DIN)

You should also have a valid Director Identification Number (DIN) as the director of the organisation. You can get your DIN by applying for the same through DIR-3 or SPICe when you incorporate your company.

Step 3: Getting the Name Approved

You can get the name of your company approved by submitting the Name Approval Form or when you apply for your DIN through SPICe (INC-32) during incorporation. If the concerned authorities don't approve of the Name, you can resubmit the Name Approval Form or refile it through SPICe. Note that the name approval process may take up to three days and that you don't need to submit your DIN or DSC for the same. However, you should mandatorily have an MCA account.

Step 4: SPICe (INC-32)

You must fill and submit the form SPICe (INC - 32) only after getting the attestation of legal authority, such as a Chartered Accountant, a company secretary, or practicing Advocate.

Step 5: The e-MoA (INC-33) and e-AoA (INC-34)

You must also digitally sign and submit the e-MoA (INC-33) and the e-AoA (INC-34) forms along with the SPICe (INC–32) form. If the registrar finds that you have provided all the necessary documents and digitally signed them, they will assign the company a unique Corporate Identity Number (CIN).

3. Documents

When registering a Public or Private Limited Company, you must submit a set of documents that the registrar will verify before assigning the Corporate Identity Number (CIN).

The documents required are as follows:

1.  Digitally signed PAN Cards of all the directors.

2.  Valid identity and address proofs and two passport-sized photographs of all the directors.

So, these are the documents that you need to get your company registered. Also, note that you must pay a registration fee that may vary depending on the company type and service provider.

Final Thoughts

So, you now know the legal steps you must take to register your company or business in Maharashtra. You should register your business or company as it helps distinguish it from other companies. Also, by registering your company, you are protecting yourself from various liabilities. The other advantages of legally registering your business are that the company will continue to exist, even if the directors change. It also gives the business or company an identity that sets it apart from other such legal entities as buildings or complexes.

Also Read:

1) Why You Should Have A Joint or Independent Account With Your Business Partner?
2) Things Business Owners Should Do If They Can’t Pay Credit Card Bills
3) How To Charge for Your Services if You Are an Event Planner?
4) How to Answer the Phone Professionally at your Business?

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FAQs

Q. What is the expansion of AoA and MoA?

Ans. MOA or the Memorandum of Association states information about the company, such as its name, address, aims, and objectives, and other things like authorised and paid-up capital.

AOA stands for Articles of Association and forms the core documents you need to submit to the Registrar of Companies during registration.

Q. What is a Company?

Ans. The Companies Act, 1956 defines a 'Company' as a group of people formed and registered under the Act or other such laws. A company is a legal entity that differs from other entities, such as shareholders. Also, there are differences between the company owners and those who run it or those involved in the daily activities that set it apart from other legal entities.

Q. What is the difference between a private and public company?

Ans. In a Private Limited Company, there will be at least two directors and an Indian citizen. Also, the Company cannot have more than 15 directors whereas a Public Limited Company requires at least three directors and seven shareholders. All the directors must have valid Government identity proof and a PAN card.