10 Myths of Company Registration: Busted

Last Updated at: Jun 23, 2021
Ten common myths of company registration- Busted
According to a Supreme Court ruling, the lender can recover his dues from the guarantor if the borrower is unable to repay the loan. By law, a company has to be registered and run legally cannot have the legal entity.



Entrepreneurs who wish to register their company or business are stressed out due to various reasons. They are afraid of the legal formalities and struggle a lot to register their business. There are certain misconceptions among the company owners when registering their company. Here the myths on company registration make the registration process simple and easy.

Today with start-ups emerging from every nook and corner of the country, it is very important to have a company registration. By law, a company has to be registered and run legally. cannot have the legal entity; so today Llet us’s break down the myths around company registration step by step.

Check out some of the articles below to find step by step information on company registration, iso registration or income tax related services and avail our resources to help you through the process.We are one of the best online service providers in the market for tax registrations and legal documentation.

There are quite a few misconceptions that people have when it comes to following the legal process and exactly how to do it. We pick some of top 10 myths of company registration in India and bring forth a clear picture on what is actually acceptable under the law. It is crucial to know about how the law can impact your business and avoid any mistakes being made.

    1. The specific location of company registration
      Many individuals who have started their startup are not aware that they can register a private limited company in residential premises. According to the Provisions of Companies Act, 2013 erstwhile companies act, 1986 apply to Private limited companies and they have no restriction in the companies act for registration of companies in the residential locations. Though, it is important for a company to affix its name and the registered address of its office at every location they carry business on.

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FACT: You can legally register your company in a residential location.

2. Legal documents
There are many scammers who deceive entrepreneurs by asking them to submit all their original documents during the company registration process. They have tried to cheat people, who are unaware, give in to such fraudulent ways only to realize later.

FACT: Scanned copies which are duly attested by the applicants are only accepted. 

3. Service tax registration
There is a misconception that service tax registration is mandatory, which is not true. Only individuals who provide a taxable service are only required compulsorily to apply for the service tax registration. Therefore, providing small scale service providers with the option of availing service tax exemption.

FACT: Service tax registration is not compulsory if your financial income does not exceed the specified bracket.

4. Company turnover
It is important to have a certain amount of turnover in your business to register a company, is absolutely untrue. The company owners could just be starting with their new venture.

FACT: You do not need any level of turnover or sales to register a company.

5. Allocation of shares
It is a myth that every director of a company must hold shares. The actual shareholders are individuals who have invested their money.

FACT: Directors of corporations are not required to have shares.

6. The rate of tax for private companies
VAT/GST, PF or Service Tax automatically applies to Private Limited companies.

FACT: The rate of tax for private companies can be sometimes higher as compared to that of an individual trader or partnership firm. Although, there are several possibilities where tax deductions are possible.

7. Investment of shares
It is completely false that only human beings can be owners or shareholders of a company.

FACT:  According to law, they consider a company as an “artificial person” and hence an incorporated company can invest in the shares of another corporation.

8. The share capital of a company
It is compulsory for share capitals of a company to be deposited in a bank at the time of incorporation; which is totally untrue.

FACT: Today entrepreneurs can find the best flexibility in a Private Limited venture.  The moment your business is incorporated, from that day itself all the modifications related to capital, business, official address and many more is possible.

  1. Maintenance of legal teams
    It is a myth that the maintenance of legal teams within the company is very expensive.

    FACT: There is a minimal amount of expense when it relates to accounting and tax filings. There are numerous skilled professionals in the field of accounts like chartered accountants or company secretaries who can help with these services at an affordable cost.

10. Registration renewal
It is mandatory to renew the registration of your company every year and this is entirely false.

FACT: Onetime registration of your company and it’s completely done. It will forever be functional unless they do the legal process of closing the company through the owners. There are fraudulent people who might want you to pay extra money but do not believe them as no such thing exists. The only mandatory thing is of filing yearly returns with the ROC (Registrar of Companies) and Income Tax department.


On a concluding note, do not get trapped into the myths of our society but take a step ahead to find out by researching the details through official and authentic channels. Vakilsearch is a prominent company in India which offers you company registration through a feasible and economical process. Connect with us today and ensure to get the best consultation and advice from our skilled team of legal experts.

Know About the Benefits of Private Limited Company Registration

One must be clear about the company registration process so that you can avoid unnecessary confusions. You can get some professional help for the same from trustable sites available online. Do not get cheated by trusting some mediators who charge you more amount for the company registration process.