Private Limited Company Registration
A private Company registration in India is one of the most popular business registrations among the small, medium, and large enterprises in India. Start-ups and businesses with higher growth aspiration popularly choose Private Company registration as a suitable business structure. A private Company Registration is a company which as a minimum 2 and maximum 50 members present.
A private Company Registration must have minimum paid-up capital of Re. 1 or such higher amount as may be prescribed from time to time and has restricted the right of a member to transfer its shares. A private Company Registration doesn’t invite the public to subscribe its share capital. It is mandatory to use the word “Private Limited’ at the of the name of the Private Limited company registration in India. This form of company has many benefits such as no interference of public or government, no requirement for the issue of the prospectus, separate legal existence from its members, can enter into a contract in its own name. Also, a Private Company registration is eligible to take benefit of registration under the Startup India Scheme of the Government of India. This scheme avails multiple benefits including tax exemptions for the recognized startups.
Benefits of Private Limited Company Registration in India
Distinct Legal Entity
The greatest benefit of private limited company registration is that it is treated as a single entity in which the company is responsible for all the debt payments. The company is liable for any shortcomings, its members are not personally affected, they are only responsible for unpaid shares. A private limited company registration has separate legal entity from its owners which safeguard the owner from being sued in case of any legal controversy.
Tax Savings
By registering a Private Limited Company, there are many ways in which you can have extra monetary benefits by saving tax. There are some tax planning tips that every Private Limited Company registration considers to fill its pockets a little high. Salary to the director is an allowable expense for the Private Ltd Company registration. All preliminary expenses like drafting of MOA and AOA, stamp duty printing of documents, etc. are also allowed as expenses. Private Ltd Companies are taxed at a rate of 22% with a surcharge of 10% and cess of 4% making the effective tax rate as 25.17% which is lower than LLP Registration which is taxed at 30%.
Brand image
Registering a Private Limited company gives a brand image to business compared to running a business as a sole proprietor. Generally, large business firms prefer to deal with companies instead of sole proprietor firms. There might be a requirement of tender or job work, which can be applied only by the company.
Easy Fund Raising
A private limited company registration enjoys a better option for borrowing funds. It can issue debentures secured as well as unsecured. Banks and other financial institutions also prefer giving financial assistance to large private firms.
Eligibility For Private Limited Company registration in India
- Step1: Application for Name Approval
- Step 2: Applying DSC
- Step 3: Documents Preparation and Filing of Forms
Name of private limited company registration is a crucial step for new company registration. Two proposed names in order of preference, objective/purpose of business activity along with statutory fees are submitted to MCA. The proposed name should be unique and shouldn’t have punctuation marks. In case MCA has any observation, then the word comes for resubmission, which delays the whole process. Once the name is approved, it is valid for 20 days (including weekends or other holidays), and all other formalities must be completed within this period.
Digital Signature is an online signature used for filing documents online. Digital Signature Certificate (DSC) is required for all shareholders and directors for private limited company registration. It can be applied in parallel with applying for name approval as there is no DSC requirement in the name application. If the director or shareholder of the private limited company registration already has DSC, this step can be skipped.
After getting DSC and name approval, the next step is to file forms- Spice + Part, Agile Pro, Spice MOA, Spice AOA, and INC 22 forms with MCA. These forms consist of information regarding private limited company registration such as registered office, authorized, paid-up capital, shareholding pattern, directors, shareholders details such as an address, education qualification, etc. Some of this information is required to be supported required proof like rent/title deed of registered office, PAN card, etc.
- Step 4: Getting Incorporation certificate
- Step 5: Opening Bank Account
After submitting all the documents and getting verified by the Registrar of Companies (ROC), you will receive a Certificate of Incorporation within 7-12 days. This certificate of incorporation will act as a birth certificate for your company registration, and the company registration process ends here. The certificate of incorporation will consist of name, registered address, 21 digits alpha-numeric number Corporate Identity Number (CIN) approved by MCA, and notified on the registered companies.
After getting the Incorporation certificate for private limited company registration, a bank account needs to be opened in the name of your company. One needs to submit an incorporation certificate, MOA, AOA, and other necessary documents required by the bank. Before the commencement of business, proposed paid-up capital must be deposited with the bank, and INC-20A needs to be filled with MCA to get the certificate of commencement.
Documents Required
| For Each Directors and Shareholders | Address Proof of new company | Additional Requirement For Foreign Nationals |
|---|---|---|
|
Passport Size Photograph PAN Card Aadhar Card Voter ID/ Passport/ Driving License Telephone /Electricity Bill/ Bank A/c Statement |
Telephone /Electricity Bill/ Tittle/Sale – Owned Property Rent Agreement – Rented Property NOC – Rented Property |
Passport * Documents should be notarized or consuralized or apostilled |
Frequently Asked Questions
How is a private limited company (Pvt Ltd) different from a public limited company (PLC)?
Unlike public limited companies, private limited companies cannot offer shares to the public and typically have fewer regulatory requirements and disclosure obligations.
What are the advantages of forming a private limited company (Pvt Ltd)?
Advantages include limited liability protection for shareholders, separate legal identity, tax benefits, flexibility in management, and easier access to funding and investments.
How Long it take for Registration?
The Private Limited (Pvt Ltd) company registration online takes up to 14 days*. The steps include name application, which we do on the same day as the engagement. Another workstream of the TaxLane Corporate Services team starts with DSC registration and collecting the KYC documents. In the meantime, the name for company registration comes, and we proceed with filling out the final form. The entire process is done in a well-coordinated manner, which makes it very efficient and completely paperless. Once company registration is complete, the team assists in opening a bank account, doing GST Registration and other formalities.
What are the tax implications for private limited companies?
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Private limited companies are subject to corporate income tax on their profits, with rates varying depending on jurisdiction, and shareholders may be liable for taxes on dividends received.
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How does limited liability protection benefit shareholders of private limited companies?
Limited liability protection means that shareholders are not personally liable for the company’s debts and obligations beyond their investment in the company’s shares, reducing personal financial risk.
Can a private limited company convert to a public limited company (PLC)?
Yes, subject to meeting certain criteria and regulatory approvals, a private limited company can convert to a public limited company to access public capital markets and expand its shareholder base.
What are the key requirements for setting up a private limited company?
Requirements typically include selecting a unique company name, appointing directors and shareholders, drafting articles of association, and registering with the relevant government authorities.
How can a private limited company raise capital and attract investors?
Private limited companies can raise capital through private equity investments, loans from financial institutions, or crowdfunding platforms, often by offering equity stakes to investors.
Where can I find more information about forming and managing a private limited company?
Additional information can be obtained from government websites, legal advisors, business support organizations, industry associations, and online resources dedicated to company formation and management.
What are the implications of company dissolution for private limited companies?
Company dissolution involves the legal process of winding up a private limited company, settling its debts, and distributing remaining assets to shareholders, resulting in the company ceasing to exist.