How to Register a Trading Company in India

How to Register a Trading Company in India



A trading company is a legal entity that can conduct wholesaling, franchising, retailing, importing, and exporting operations. It is a common business structure for firms that seek to diversify their operations or expand their international reach.

As its name suggests, a trading company typically deals with the sale of goods that are in demand in the market. The company may offer multiple items sourced from a single factory or provide custom packaging, labeling, and other services. The company will also have a close relationship with factories, and thus, may be able to negotiate favourable terms for their customers.

Investors seeking to set up a trading company will need to submit the following documents with the Registrar of Companies (ROC). The MoA lays down the objects of the company and the AOA specifies the activities that the company can carry out.

However, a trading company will not be able to directly oversee the manufacturing process of its products. This could mean that the company may not be able to identify any defects in the goods and therefore, will have to prioritise profit over quality control.

Moreover, the directors of a trading company are liable for all business-related debts and other liabilities. Therefore, it is advisable for investors to change their trading company into a limited liability company if it becomes too large and they are exposed to significant debts. This can be done through a simple procedure that can be completed within two months.

 

 

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