Don’t you think there must be some “Better than I thought of
” kind of benefits why so many people choose Private Limited Company over so many other types of registrations out there?
While neither choice is better or worse than the other, you will need to assess what kind of freedom you want with your company along with other elements.
A private limited company is a “Privately” owned company that is held by the people. Private Limited companies are the most popular legal structure of the business.
Generally, Start-ups and businesses with bigger growth aspirations choose to start a private limited company.
THE POSITIVES OF REGISTERING YOUR BUSINESS AS A PRIVATE LIMITED COMPANY.
- Easy transferability of shares – Shares of a company limited by shares are transferable by a shareholder to any other person. The transfer is easy as compared to the transfer of an interest in a business run as a proprietary concern or a partnership.
- Eligible to apply for Startup India and take benefits from the Startup India registration.
- Borrowing Capacity – A company enjoys better avenues for borrowing funds. It can issue debentures, secured as well as unsecured, and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
- Limited Liability Exposure – This type of limited liability refers to the liability for directors and officers of the company to only lose up to the amount that they invested in the company. Limited liability protects the personal wealth of a private company’s shareholders and does not put personal assets at risk.
- Capital Requirement – Whatever amount the founder members deposit from their OWN POCKET is called CAPITAL. It could be the amount that you need to start the business. There’s no minimum or maximum limit to this.
- Use of PRIVATE LIMITED– the name of the company you choose should be catchy, unique, and never heard of. The name is available for Only 20 days, and within those 20 days, we need to file the incorporation form. We can also extend the name availability up to 60 days by paying extra fees.
PREREQUISITES TO INCORPORATE PRIVATE LIMITED COMPANY
- Minimum 2 Members – The number of members should be a minimum of two and a maximum of 200.
- Minimum 2 directors – There must be at least two directors (The same person can be the director and shareholder)
- The object of the Company – The company shall have a valid object for running the business
- Funds – Capital for the business (There is no minimum capital requirement)
- Office address – Address of the Company
STEPS FOR INCORPORATION OF A COMPANY
- Ascertaining the name – The first step is to select a suitable name for the company. Further, the form Spice Part A shall be filed for name approval. The name you select for your business entity is not just a Business name but an Identity of your Company.
- Digital Signature Certificate (DSC) –The Directors of a Private Limited Company must have a Class III digital signature and therefore, the signature will be used to file the registration, ROC compliance form, and the Income-tax returns (ITR).
- Once the name is approved, the next step is the preparation of Spice Part B, drafting of MOA and AOA.
MOA is considered a sphere in which the company can perform its business, objectives of the company.
It’s divided into 5 clauses:
- Name Clause
- Registered office Clause
- Object Clause
- Liability Clause
- Capital Clause
AOA are documents that state rules and regulations that the inner management will follow. AOA creates a contract between the company and the members which states the terms and conditions, duties, rights, and liabilities of the members
4. With the introduction of SPICE FOMRS, we can now apply for GST, EPF, and ESIC in Agile Form which is submitted along with incorporation forms.
5. Once the Forms are ready, downloaded, and signed, we need to pay Stamp duty and PAN and TAN fees. Click here to know the State-wise stamp duty.
6. Incorporation Certificate-After the registration fees is paid and all the documents are verified, the Registrar will issue the Incorporation Certificate.
The date mentioned in the certificate will be the date of incorporation of the company.
DOCUMENTS REQUIRED FOR THE INCORPORATION OF A PRIVATE LIMITED COMPANY
Scanned copies of:
Note: All documents shall be self-certified. There is no requirement for submitting physical documents.
- PAN card & Aadhaar Card of the Directors & Shareholders
- ID proof (Voter ID, Driving license, passport)
- Address proof of directors (Utility Bills like telephone, Wi-fi, electricity, etc .) (Shouldn’t be prior to 2 months)
- Address proof of Company (Utility Bills like telephone, Wi-fi, electricity, etc .) (Shouldn’t be prior to 2 months)
- Passport Size Photograph, mobile number, and email address
DISADVANTAGES OF INCORPORATION
Disadvantages of a company include that:
- the company can be expensive to establish, maintain and wind up
- the reporting requirements can be complex
- your financial affairs are public
- if directors fail to meet their legal obligations, they may be held personally liable for the company’s debts
- profits distributed to shareholders are taxable.
TIME TAKEN FOR THE INCORPORATION PROCESS
The whole procedure for the incorporation of a company might take 7-10 working days post receiving all the documents from the client.
The incorporation of a company thus has its own pros and cons. Incorporation greatly depends on the needs of the business, if the members perceive the business as scalable then the high incorporation costs are completely justified.
Contact Us for further details and we’ll help you make your business a reality without breaking your bank. It is best to apply for this Opportunity with the help of experienced professionals and incorporate your company without “Hassles or Hiccups”.
I think now you have enough reasons to believe that registering a Business as a Private Limited Company is a way better deal than being a Proprietorship entity or a Partnership firm. Because, if you are a dreamer, you have gotta go a long way…and if you are thinking Big you need to play safe..!
To avail of all the Company formation services and get an Edge Over Your Competitors Call/Whatsapp +91 9301789019
or email at [email protected]
- What are the requirements for Incorporation?
To register a company, you may be wondering whether you need a professional service firm or not. The answer is definitely yes. Udyog buddy is in the business of helping early-stage start-ups to register their companies and then to assist them in managing tax and regulatory compliances. To register a company in India begins with the analysis of the requirements to register the company.
Following is the list of the requirements-
- Two Shareholders of Company
- Two Directors
- Unique Name
- Registered Office Address & NOC from Owner
- Requirement of Capital (Authorized Capital Vs Paid-up Capital)
- Documentation for company registration.
- How much time does it take?
If you have all the documents ready and are in order than it will take no longer than 7 to 10 working days. However, it is depend upon the Registrar of the Company.
3. How many directors are required to form a company?
Minimum 2 Directors are required in case of Private Limited and Minimum 3 Directors in case of Public Limited.
4. Director and Shareholder can be the same Person?
Yes, the same person can acts as shareholder and director of the company.
5. Can we form a company with multiple objects?
Yes, a company can register for multiple businesses, but it depends on whether the activities are related or not. However, all the activities which are listed should pertain to the main business of the company.
6. Can I use word India in the name of the Company?
Yes, However, it should be ensured by the applicant that the first word used in the company name shall be unique and not generic.
7. Can I use my residential address as company’s address?
Yes, the company can be registered at the owner’s residential address. A copy of the utility bill along with NOC from owner is required to be submitted.
8. Can NRIs/foreign nationals become directors in a private limited company?
Yes, a NRI or a foreign national can become a director of a private limited company. He or she must obtain a DIN from the Indian ROC. They can also hold a controlling stake in the company. As long as at least one director on the board of directors is an Indian resident.
Disclaimer: The article provided here is solely for information purposes. This is prepared based on information provided on various forums and same has been utilized only for information of the readers. The information presented on this article does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice. In case of necessity, do consult with professionals.