Meaning

A Private limited company is a type of business entity that is registered under the Companies Act, 2013. It is a popular choice for entrepreneurs because it offers a number of benefits, such as limited liability for its members, perpetual succession, and the ability to raise capital from the public.

Benefits of Registering a Private Limited Company

There are many benefits to registering a private limited company in India. These benefits include:

• Limited liability: The liability of the members of a private limited company is limited to the extent of their shareholding. This means that the members' personal assets are not at risk if the company goes bankrupt.
• Perpetual succession: A private limited company has perpetual succession, which means that it continues to exist even if the original members leave the company.
• Ability to raise capital from the public: A private limited company can raise capital from the public by issuing shares. This can be a useful way to finance the growth of your business.

        Steps you need to follow to register a private Limited Company:

1. Choose a name for your company. The name of your company must be unique and cannot be similar to the name of any other existing company. You can check the availability of a name using the Ministry of Corporate Affairs' (MCA) online portal. You can provide two options for name reservation at one time.There is a payment of Rs. 1000 to be made at the time of name reservation.
2. Obtain a Director Identification Number (DIN) and a Digital Signature Certificate (DSC). A DIN is a unique identification number that is required for all directors of a private limited company. A DSC is a digital certificate that is used to sign electronic documents. You can apply for a DIN and DSC online through the MCA portal.
3. File the Memorandum of Association (MoA) and Articles of Association (AoA) and other forms with the MCA. The MoA is a document that sets out the objectives and rules of your company. The AoA is a document that sets out the internal governance structure of your company. You can file the MoA and AoA online through the MCA portal. Other Forms such as Spice+, Agile Pro and INc-9 also needs to be filed.
4. Certification from a Professional: You will need a Professional (CA,CS or a CMA in practice) to sign the forms.
5. Pay the registration fees. The registration fees for a private limited company depends upon the authorised Capital of the company and the state/UT in which you wish to register your company. You can pay the fees online through the MCA portal.
6. Get a Certificate of Incorporation (CoI), PAN, TAN, EPFO, ESIC- After the company has been registered, you will recieve a copy of CoI, PAN, TAN, EPFO, ESIC on your email id.

Once you have registered your company, you will need to take steps to comply with the Companies Act, 2013. These steps include filing annual returns, appointing auditors, and paying taxes.

If you are not sure how to register a private limited company in India, you can hire a company formation agent to help you. A company formation agent can help you with all the steps involved in the registration process and ensure that your company is registered correctly.

Frequently Asked Questions

What is a private limited company?

A private limited company lies somewhere between a partnership and a widely owned public company. It limits the liability of the owner to their respective shares. It also restricts shareholders from publicly trading shares. The maximum number of shareholders in a private limited company has been extended to 200 as per the new Indian Companies Act.

What are the benefits of registering a private limited company?

There are many benefits to registering a private limited company, including:

• Limited liability: The liability of the owners of a private limited company is limited to the amount of their share capital. This means that if the company goes bankrupt, the owners will not be personally liable for its debts.
• Tax benefits: Private limited companies can enjoy certain tax benefits, such as a lower corporate tax rate.
• Access to finance: Private limited companies are more likely to be able to access finance from banks and other lenders.
• Increased credibility: Registering a private limited company can give your business increased credibility with customers and suppliers.

How many directors are required to incorporate a private limited company in India?

A minimum of two directors are required for registering the private limited company. Each director should have a DIN i.e., director identification number which is allotted by the ministry of corporate affairs. It is important that one of the directors must be a resident of India, this means he/she should have resided in India for not less than 182 days in a preceding calendar year.

How much does it cost to register a private limited company in India?

The cost of registering a private limited company in India varies depending on the state in which you are registering your company. However, the total cost is typically around INR 10,000(except in Punjab or Madhya Pradesh).

How much time is needed to set up a private limited company?

The registration process gets completed when you get a certificate of incorporation(COI) issued by the registrar. The application can processed within 7-10 working days.

What are the mandatory compliance that a Private Limited needs to observe?

The basic mandatory compliance are: Maintenance of proper books of accounts Statutory audit of Financial Statements Directors KYC(DIR-3 KYC) Filing of business Income tax return every year before 30th Oct Filing Annual ROC return i.e AOC-4 and MGT-7.

Is stamp duty payable during incorporation process?

Yes, Stamp duty charges are imposed by the state in which the registered office is proposed to be located. The charges are on MOA, AOA & form INC 32. These charges are covered under the plan for all the states except Punjab & Madhya Pradesh.

Can the Registered office of a company be at the residential address?

Yes, it can be at the residential address and it can be easily changed within the same state if and when required.

Will the share Ratio be 50:50 between the two directors/Shareholders?

No, there is no such requirement.

Conclusion

Registering a private limited company in India can be a complex process. However, it is a worthwhile investment for entrepreneurs who are looking to start or grow their businesses. By following the steps outlined above, you can ensure that your company is registered correctly and that you are able to take advantage of all the benefits that a private limited company has to offer.