Do you have a great business idea? Or you have a business established but now it is time to register it in India? It is the time you first understand the important legal jargons to know before incorporating a company in India.
The 12 important legal jargons that will come handy while registering a business in India are listed below:
1. Company Incorporation:
The process by which company files required documents with the Registrar of Companies detailing the particulars of a proposed business entity.
2. Digital Signature:
A digital code (generated and authenticated by public key encryption) which is attached to an electronically transmitted document to verify its contents and the sender’s identity.
3. Registrar Of Companies:
The Registrar of Companies India is the official agency that deals with the administration of Companies Act 1956 & Companies Act, 2013. It falls under Ministry of Corporate Affairs. It has offices in all major states of India. The Registrar of Companies is the primary regulator for company- related matters in India.
4. Director Identification Number:
Director Identification Number (DIN) is a unique identification number for an existing director or a person intending to become the director of a company.
5. Book Keeping & Accounting:
Bookkeeping is the recording of financial transactions and is part of the process of accounting in business.
Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation.
6. Patents & Trademark:
A patent for an invention or a business idea is the grant of a property right to the inventor. Patents are granted for new, useful and non-obvious inventions for a period of 20 years from the filing date of a patent application, and provide the right to exclude others from exploiting the invention during that period.
7. Memorandum of association (MOA):
A Memorandum of Association (MOA) is a legal document prepared in the formation and registration process of a limited liability company to define its relationship with shareholders.
8. Articles Of Association (AOA):
The Articles of Association is a document that contains the purpose of the company as well as the duties and responsibilities of its members defined and recorded clearly. It is an important document which needs to be filed with the Registrar of Companies
9. Unique Identification Number:
A Unique Identification Number (UNI) number is a numeric identification code that is attached to an item or business entity which is exclusive to that particular entity.
Any person, company or other institution that owns at least one share of a company’s stock is called a shareholder. Shareholders are a company’s owners. They have the potential to profit if the company does well, but that comes with the potential to lose if the company does poorly. A shareholder may also be referred to as a “stockholder”.
11. Company Secretary:
A company secretary is an officer appointed by the directors of a firm as responsible for ensuring that firm’s legal obligations under the corporate legislation are complied with.
12. Some Tax glossary
Income tax return is a document you file with the Internal Revenue Service or the state tax board reporting your income, profits and losses of your business and other deductions as well as details about your tax refund or tax liability.
Service tax is a tax levied by the government on service providers on certain service transactions but is actually borne by the customers.
A sales tax is a consumption tax imposed by the government on the sale of goods and services. A conventional sales tax is levied at the point of sale, collected by the retailer and passed on to the government.
Professional tax is the tax by the state governments in India. Anyone earning an income from salary or anyone practicing a profession such as a chartered accountant, lawyer, doctor etc. are required to pay this professional tax.
Import Export Code:
IEC is a ten digit number granted by Directorate General of Foreign Trade under Ministry of Commerce and Industry, to any bonafide person/ company for carrying out import/export
Shop & Establishment Act:
The Shops and Establishment Act is a state legislation act and each state has framed its own rules for the Act. The object of this Act is to provide statutory obligation and rights to employees and employers in the unauthorized sector of employment, i.e., shops and establishments. This Act is applicable to all persons employed in an establishment with or without wages, except the members of the employers’ family.
The above legal jargon will give a heads up about the important terminologies that are used while setting up a business. You can also refer to the previous blog about important facts on business registration for more information.