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Private Limited Company
Private Limited Company is a company which is privately held. The liability of the members of a Private Limited Company is limited to the amount of capital contribution. Shares of this type of company cannot be publicly traded.
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Advantages of Private Limited Company
Limited Liability
In a private limited company, shareholders aren't personally responsible for the company's debts. If the company runs into financial trouble and has to shut down, shareholders don't risk losing their personal assets.
Members
To start a private company, you need at least two people but no more than two hundred, according to the Companies Act, 2013.
Perpetual Succession
Even if the owner of a private limited company passes away or leaves, the company continues to exist. It can keep doing business and owning assets independently.
Tax Advantage
Small private companies making less than INR 250 crores only have to pay 25% tax on their profits, which is lower than the 30% rate for other types of businesses.
Raising Capital
Private limited companies can sell shares to investors to raise funds, helping them expand without taking on too much personal risk.
Trustworthiness
Private limited companies are registered with the Registrar of Companies under the Companies Act, 2013. You can easily check their details online to ensure they're legitimate.
Who and Why should you get Private Limited Company Reistered?
Any person who would like to avail the following advantages may opt for this form of structure
- limited number of members,
- less compliances than public company,
- limited liability of members,
- less capital contribution and
- tax advantages
Process of Private Limited Company
Before application for incorporation, name for the proposed company is required to be reserved, where two names can be applied at a time, valid for 20 days once approved.
General practices to choose and apply the name are:
- Name should be distinct and unique.
- Name should be short and simple.
- Name should not contain any restricted words.
- Name should not infringe any Trademark Registered and should not be identical to any company or LLP registered.
SC are required to file various eForms on MCA portal, digitally sign documents for the incorporation of the company and other applications.
Application for online registration of the company is required to be made online using SPICe INC-32 form along with e-MOA & e-AOA. DIN PAN, TAN etc. are to be filed along with SPICE INC-32.
On review and verification and after satisfaction, Registrar may issue the Certificate of Incorporation showing the Corporate Identification Number (CIN) and date of incorporation of the company along with the PAN and TAN of the company.
After depositing the initial capital in the bank account of the company, it is required to file form INC-20A for Commencement of Business post which a company can commence its business.
Documents required for Incorporation
ID Proof
Self-attested PAN Card of the first shareholder(s) and director(s)
Address Proof
Bank Statement/Utility bill in name of director (not older than two months)
Photo
Passport size photograph of the director(s)
Registered Office Proof
- Utility bill (should not be older than two months)
- No objection certificate from the owner of premises for the Registered Office address of the company
- Rental Agreement with the owner of registered office and rent receipts (if premises is rented)
- Registry Proof or House Tax Receipt (in case of owned property)
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- Name Approval Letter.
- Incorporation Certificate.
- MOA /AOA
- DIN Approval Letter and Digital Signature Token
- PAN Card of the Company and Company Stamp
- TAN/TDS Letter of the Company
- Incorporation kit to help you open a current bank account
- Filing of INC 20A for Commencement of Business