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How Can One Register a Digital Marketing Agency?

Digital marketing happens to be one of the most thriving businesses of the century. It is however helpful if the agencies are registered legally, not only to avoid unpleasant surprises but also to avail several benefits such as raising equity and funds, having perpetual succession, and bestowing limited liability on its members.

Marketing methodologies have evolved with time in India. From giving hand notices to wall posters to building billboards to occupying the huge page of reputed newspapers, India has seen every bit of marketing stunt. Now that it has been decades since we stepped into the digital era, why should our marketing strategies belong to the bygone times? To suit the current trends, digital marketing has pushed all the other methodologies behind it and has now proclaimed an uncompromising place in marketing.

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Digital marketing is the promotion of products and services, or more simply, the promotion of brands, using the internet. These brands are put in touch with potential customers using various digital platforms. A number of individuals or agencies have now stepped in to aid these brands to carry out their digital marketing campaigns. Such agencies are called Digital Marketing Agencies. With the boom in digital media, quite a number of them want to start digital marketing agencies, as it is one of the businesses which render the owners a promising earning potential.

Registration of Digital Marketing Agencies:

The first step in starting a business is getting it registered. The same holds good for digital marketing agencies as well. The agency can be registered as a Sole Proprietorship firm, Limited Liability Partnership (LLP), One-Person Company (OPC), or Private Limited Company. 

Sole Proprietorship Registration:

A sole- proprietorship firm is a single-person firm. Any resident of India can incorporate a digital marketing agency as a sole proprietorship firm. Moreover, it is the most common and easiest platform for small business entities. One of the biggest advantages a sole proprietorship has over other entities is the ease of incorporation it exhibits. The cost and time taken to incorporate are quite on the lower side as against the others. Also, there is no minimum capital requirement to kick start a sole proprietorship.

Documents Required:

  •       Name of the business, the digital marketing agency in this case
  •       PAN card of the proprietor
  •       Utility bills like electricity bills, telephone bills of the agency
  •       Aadhaar Card/Voter ID card 
  •       Recent passport-size photographs of the proprietor
  •       Bank details such as the current account number of the business, bank passbook, etc.

Challenges:

  •   Sole proprietorship is much suitable only for establishments that do not raise huge revenues or for the ones that do not invest a high capital
  •   It is suitable only for businesses that work under a single master
  •   The proprietor is fully liable for the debts that might incur
  •   The taxes filed for the proprietorship are the proprietor’s personal taxes.

Limited Liability Partnership (LLP):

LLP is the hot favorite of any business these days, as it offers the advantage of being a separate entity like that of a private company along with the flexibility of a partnership firm. Being a separate legal entity would mean that the LLP can enter contracts, buy and sell property, etc by itself. Here as the name suggests, the liabilities of the partners are limited and proportional to their contribution or investment in the company. The partners of the firm are jointly and severally liable here. Just like a sole proprietorship, there is no minimum capital requirement in an LLP firm.

Prerequisites for an LLP Firm:

  •   The firm should have a minimum of 2 to a maximum of 200 partners
  •   The company should duly file its annual returns
  •   The Financial statements should be filed at regular intervals
  •   The Income tax returns must be filed annually.

Documents Required:

  •       Digital Signature Certificate (DSC)
  •       Name Approval Certificate
  •       LLP Incorporation Certificate
  •       LLP agreement between the partners
  •       PAN (Permanent Account Number) & TAN (Tax Deduction Account Number)
  •       Documents of Partners- PAN, ID proof, Address proof, Residence proof, photographs.

Merits of Incorporating an LLP Firm:

  •   The partners of the LLP are bound by virtue of the agreement
  •   It is flexible and does not impose any excessive legal and procedural requirements on its members
  •   Nominal registration cost and lesser compliance formalities
  •   No mandatory audit procedures.

One Person Company Registration (OPC):

Introduced in 2013, OPCs are for companies that have a single member only. However, it differs considerably from a sole proprietorship firm. It is a type of private company and entails legal recognition. it limits an entrepreneur’s liabilities and also offers certain tax benefits, unlike a sole-proprietorship.

An individual can incorporate a One Person Company through Simplified Proforma for Incorporating Company electronically (SPICe) service under the Ministry of Corporate Affairs (MCA).  The applicant needs to apply for Name Reservation, Digital Signature Certificate, Director Identification Number, Incorporation letter, PAN, and TAN. 

Documents Required:

  •       Digital Signature Certificate (DSC) 
  •       Name Approval certificate
  •       Memorandum of Association (MoA) 
  •       Articles of Association (AOA) 
  •       Company Incorporation Certificate INC 2
  •       Declaration for the stipulated compliances.

Merits in Incorporating an OPC:

  •   The single member of the company has limited liability only
  •   Enjoys the same privileges as a private limited company and has perpetual succession
  •   Easy credit facilities and OPC is favored by banks and other financial institutions unlike sole proprietorships
  •   The annual returns can be filed easily and the presence of a company secretary is not mandatory.

Private Limited Company:

A private limited company is always preferred by businesses, as it gives the business an endless scope to grow and expand. This is exactly why a number of startups with higher growth aspirations choose a private limited company with their eyes closed. Further, the company is a separate legal entity and is different from the members of the company. This implies that the debts and liabilities of the company belong only to the company and not to the director or the members of the company.

 The digital marketing agency that wishes to be incorporated into a private limited company has to be registered under the Companies Act, 2013. The company should have a minimum of two to a maximum of two hundred members. The shareholders of the company act as the investors of the company and they invest capital to run the business. The ownership of the company is defined by its share capital. 

Documents Required:

  •       Digital Signature Certificate (DSC)
  •       Name Approval (INC 1)
  •       Memorandum of Association (MoA) 
  •       Articles of Association (AOA) 
  •       Company Incorporation 
  •       PAN & TAN.

Merits of Incorporating a Private Limited Company:

  •   Guarantees limited liability to its members
  •   The only entity, apart from a public limited company to be able to raise capital from venture capitalists or angel investors
  •   Enables the easy transfer of shares by shareholders to other persons
  •   Has perpetual succession
  •   100% Foreign Direct Investment (FDI) is allowed
  •   Has better credibility among peers and customers.

India, being an abode to a large number of startups, digital marketing agencies have started to spring up in every corner of the city. These agencies undoubtedly help the startups reach places. Therefore, it is quite crucial that these agencies get registered and incorporated to avoid legal issues in the future. 

While there are a number of options to incorporate a digital marketing agency, it might be perplexing to pick up the right choice. To help entrepreneurs better, our professionals at Vakilsearch offer the best advice and guidance. Vakilsearch is one of India’s largest professional platforms with an experienced team of lawyers, chartered accountants, and company secretaries, and helping our clients is our utmost priority. We are just a click away and are more than ready to incorporate your digital marketing agency.

Start Your Digital Marketing Agency As One Person Company  

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