When we talk about commencement and registration of the Business, the place of business is always an associated question. The procurement of commercial space during Business Registration with Government is always an add-on cost for small businesses and service providers apart from Incorporation cost.
While commencing the business, fund is already a constraint for the start-ups. Here, to save money, founders always look forward to avoid the burdensome cost of procuring a commercial place of Business. The service providers, artists, craftsmen and dealers on the online platform do not require such place of Business as their business operations can be handled easily within a little space or only through basic infrastructure. Therefore, the requirement to procure any office is only an overhead for such businessmen and service providers.
A sole proprietorship firm or any unincorporated business can easily commence business at the Residential address. However, the question arises while incorporation and registration of Company and LLP. Know here the reason and pros and cons of using Residential Address as Registered Office Address.
What is Registered Office?
A registered office is the official address of an incorporated company, Limited Liability Partnership, association or any other legal entity. The address provided as Registered Office is the part of the public record and is displayed on the portal of Ministry of Corporate Affairs for Master Data of Company/ LLP.
While making an application for Incorporation of company or LLP, the promoters are required to provide the address of Registered Office along with the address proof including the utility bill not being older than 2 months along with NOC from the owner of the place.
Whether the resident address can be provided as Registered Office Address for Company/LLP Incorporation?
Any address can be provided as the registered office address for the incorporation purpose. However, as stated earlier the consent of the owner is must for the using the property for business purpose. Alike any other place, ministry permits to take registration of Residential address as the registered office address.
While incorporation, promoters can get registration at the residential place and subsequently establish another branch office as and when required. The company/LLP can operate from the place/office other than the registered office.
Most promoters choose the residence as registered office address in order to provide an address which is permanent in nature and to avoid the tedious procedure of change of registered office address after incorporation. Here, the temporary change of place of business is handled wisely until finding the suitable place of the business.
Following are the pointer to be kept in mind for choosing residence as place of business:
- This will not cost the promoters a lot of money and will reduce the overhead during the operations of Business.
- Any correspondence addressed to the company will be directly received by the authorized person, which will make the work easier. However, these days, communication happens only through mail.
- You may change the place of Business as and when required without change of registered office address and getting into such tedious procedure of change of office within the same city or outside the State.
- The registration under GST or any other taxation registration can be obtained in the same place considering it as place of business. Further, the one can also provide any branch office for registration under taxation policy.
- The address will be open for public access. This may lead to infringement of privacy of the directors or promoters or partners as the case may be.
- Registration under Shop & Establishment Act can be obtained even at the place of residence when required along with any other registration required.
- Once the place is registered for business purpose under Shop & Establishment Act of concerned State, the place will be treated as commercial place and appropriate rate of taxes will be levied on the concerned address.
- Providing a residential address may not act as impactful as a commercial place of business and be less trustworthy for the clients and creditors of the organization.
Today’s scenario favours entrepreneurs and businessmen by permitting the residential place as Registered Office while incorporation of company or incorporation of LLP by providing required documents with the help and consultation of professionals. Whether to choose residential address as the registered office is a complete desertion of co-founders and depends on the nature of business as well as activities. However, it is always a cost-effective option to be considered while the establishment of Business.
The author is co-founder at LegalWiz.in, India’s premier online Legal Service Provider and can also be reached at email@example.com, for conversion of LLP into Private Limited Company. Professionals at LegalWiz.in are happy to guide you!