Question

1400 words (APA Referneces)

Research the requirements for starting a corporation in the United States, India, and China. What are the basic requirements? Is the process easy or difficult for each country? How do you think the ease or difficulty of forming a corporation affects the economic efficiency of each country?

Answer 1

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A company is a corporate organization capable of selling consumer products or / and services. A Company consists of founders, lenders and workers. Corporations must be created and registered at the state level as the process falls on each of the nation's 50 states. The process may vary depending on the particularities of each state's legislation.

India:-

According to the World Bank 2015 India ranks 158 in the ranking of 189 economies. India has as of this year made it easier to register businesses by establishing a online VAT registration system and by introducing an online stamp instead of the previously used physical one. They have also recently reduced the processing fees. With these changes it has made it a little easier to register a new business but they also introduced a new requirement to file a declaration before the business operations open, which has made the process a little more difficult. So on one side they started to make the process easier but just by changing this one requirement it made it harder.
To register a company in India the new business owners needs to do the following steps:

1. First the new business owner needs to provide identification and proof of residency.

2. Identification of the Objects of the company, these must not be less than 4 in number.

3. Select a name for the company, the name must be unique and relevant to the business that the company intends to enter into. Certain keywords can be used only if the minimum share capital meets requirements. The name has to be approved by the ROC before the company can be incorporated

4. Shareholders of the company must be identified

5. Post approval of name, Memorandum and Article of Association are drafted, dated and signed. These define the objectives and the bylaws of the company. The MOA should be vetted by a qualified professional and approved by the ROC.

6. The ROC is informed of the Directors, Managers, and Secretaries of the company and the location of the Head office of the company. A letter of compliance is also forwarded to the ROC in the defined statutory formats.

7. Once Post Approval of the above, a certificate of Incorporation is received from the ROC and you are ready to begin.
The fees that are charged by the government will depend on the level of authorized capital you have chosen. Here is a list of the fees that may be charged.

The registration charges paid to the Registrar are adjusted in accordance with the company’s approved capital:
INR 100,000 or less: INR 4,000.

If the nominal share capital is more than INR 100,000, extra charges based on the amount of nominal capital are applicable to the base registration charge of INR 4,000: For each INR 10,000 of nominal share capital or part of INR 10,000 after the 1st INR 100,000, up to INR 500,000: INR 300.

For each INR 10,000 of nominal share capital or part of INR 10,000 after the 1st INR 500,000, up to INR 5,000,000: INR 200.

For each INR 10,000 of nominal share capital or part of INR 10,000 after the 1st INR 5,000,000, up to INR 1 10,000,000: INR 100.

For each INR 10,000 of nominal share capital or part of INR 10,000 after the 1st INR 10,000,000: INR 50.

This whole process can take anywhere from 3-21 business days. India is trying to make this process easier but so far they have failed. It still takes longer and more steps are needed than it is in the United States. The list above are for just one type of corporation there are many more and this is just to register the business, if the business owner is opening an actual office, which most will, is an even longer process with too many loops too jump through. To open a business in India from start to finish can take as little as 6 months because of the slow process of building permits and so on.

Because the government makes this process so difficult fewer entrepreneurs will open a business in India, which means fewer companies for the country and less jobs which will always affect the economy of the country.

China:-

According to the World Bank of 2015 China ranks 90 in the ranking of 189 economies. Recently has changed their rules and now both foreign and domestic companies can set up trading companies. Because this change is so new the local regulators that approve the projects have not had many chances to deal with these types of situations and because of this the process can be delayed.

China welcomes foreign investors, but the foreign investor must be approved first. If you are seeking to open a WFOE in China the amount of the minimum capital required varies depending on the city and the nature of your business. The investor needs to provide documents demonstrating his/her capital in his/her home country and to do this the following documents are needed:

1. Articles of Incorporation

2. Business License, national and local

3. Certificate of Status, the original or a notarized copy

4. Bank Letter stating the banking relationship and account status

5. Description of the business activities

6. The government must approve all projects, if the project is not approved the government will not approve the incorporation

7. All documents must be translated into Chinese.

The process of incorporating a business in China can take up to 30 days.
To incorporate a business in China that is not a foreign company the following procedures must take place:

1. First obtain a notice of pre-approval of the company name

2. Apply for a registration certification

3. Obtain approval to make a company seal from the police department

4. Make a company seal

5. Pay the fees for the organization code certification

6. Register with the local statistics bureau

7. Open up a company bank account

8. Apply for the authorization to print or purchase financial invoices/receipts

9. Purchase uniform invoices

10. File for recruitment registration with the local career service center

11. Register with Social Welfare Insurance Center

This process can take anywhere from 10-20 business days to complete. The approximate cost is 1624.52 RMB.
China can be very difficult to open a business if you are not familiar with the Chinese legislation and the requirements from different authorities. With this said if you know the legislation and the steps needed to take it seems to be a very easy process. When governments make it easy for entrepreneurs to start a business it creates more jobs and a better economy for the country.

U.S.:-

According to the World Bank of 2015 the United States ranks 46 in the ranking of 189 economies. There are more details and paperwork that needs to be filed when opening a corporation compared to a LLC or other entities and of course there are more fees involved.

A corporation is filed in the State where the corporation is going to be held. Each State has its own rules when it comes to forming a corporation but they most all follow the same guidelines when it comes to the documents. You will need the following to register a corporation:

1. Articles of Incorporation

2. Organizational Minutes and Bylaws

3. Share Certificates

4. IRS Form SS4- Application for Employer Identification Number

5. Filing fees are different in each state.

6. After this is completed you will open a business bank account.

7. Then you must obtain business license and permits for your county and State.

8. Register to collect State sales tax

9. Register as an employer with the Unemployment Insurance Division at the State Labor Department

10. Arrange for Worker’s Compensation and Disability Insurance

This whole process can be done on line and takes approximately 30 minutes if you know what you are doing. The form SS4 can also be done online and you will get you Employer Identification Number immediately. Depending on your state but usually you will be able to see your company registration on the states website within 24-48 hours. The fees range from $250.00- $350.00 depending on your state. This is all a very simple process.

Due to the fact that it is easy and fast to register a corporation many business are opened on a daily basis. This of course brings more jobs to the U.S. which helps with the economy.

References:

Ministry of Corporate Affairs of India (2015)

The World Bank (2015)

Harris D. (2009) How to Start a Business in China

The World Bank (2015) Doing Business 2015Going Beyond Efficiency