Private Limited Company Registration
- 24/7 support
Private Limited Company
What is a Private Limited Company?
A Private Limited Company (PLC) is one of the most common types of legal entityin India. Private Limited Companies are governed by the Companies Act, 2013 and require a minimum of 2 Directors and 2 Shareholders with one of the Directors being an Indian Resident and Indian Citizen.
To register a company in India, the following are minimum requirements:
100% Foreign Direct Ownership (FDI) is permitted in most sectors in India and there is no restriction on foreign shareholding of a private limited company. Hence, most foreign subsidiaries are established in India as private limited company.
Advantages of Private Limited Company
The following are the major advantages of incorporating a private limited company in India versus other entity types.
Separate Legal Entity
A company is both a legal entity and a juristic person. Therefore, a company has broad legal rights to like acquiring property, incurring debts, hiring people, etc. As a company is a separate legal entity, the company’s members (shareholders or directors) are not personally liable for the company’s liability.
Limited Liability
A private limited company is a separate legal entity with limited liability provisions. Therefore, the shareholders are not liable for the losses of the company – for an amount more than what was invested by them into the company as share capital.
Uninterrupted Existence
A company has ‘perpetual succession,’ which means it will continue to exist until it is legally dissolved. Because a company is a separate legal entity, it is unaffected by the death or other departure of any of its members, and it continues to exist regardless of membership changes.
Fund Raising
A private limited company has multiple options for fundraising. A company can raise funds from shareholders, investors, angels, venture capital funds, private equity funds, foreign funds, NBFCs, banks and other financial institutions. Only a company can raise debt and equity funds from investors.
Disadvantages of Private Limited Company
While a company has various advantages, registering a company may not be ideal for all entrepreneurs due to the following reasons:
Compliances
A company has to mandatorily maintain various compliances irrespective of business turnover or activity. Hence, operating a company involves a minimum recurring cost each year.
Documents Required For Private Limited Company
- PAN Card
- Passport (Foreign Nationals Only)
- Aadhaar Card
- Foreign Government – Address Proof
- Bank Statement
- Latest Electricity Bill
- Latest Telephone Bill
- Latest Mobile Bill
- Board Resolution Authorizing Investment
- Investing Company Address Proof
- Passport Size Photo
- Recent Utility Bill
- Business Place
Customer Reviews For Private Limited Company
TaxBanking has over 999+ customers and we have completed over 2000+ services through our platform. At TaxBanking, we take pride in the services delivered by us and guarantee your satisfaction with our services and support. We constantly improve and strive to deliver the best accounting, financial or secretarial services through the internet.
Private Limited Company FAQ's
Authorized capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid up capital is the amount of shares issued by the company to shareholders. Authorized capital can be increased any time after incorporation to issue additional shares to the shareholders.
Limited liability is the status of being legally responsible only for a limited amount of debts of a company. Unlike proprietorships and partnerships, the liability of the shareholders with respect to the company’s liabilities is limited.
GST registration is mandatory for certain businesses. Companies dealing with e-commerce operations or any other interstate activity and companies with turnover of more than Rs. 40 Lakhs are required to obtain the same.
A company is required to maintain certain compliances once it is incorporated. An auditor needs to be appointed within 30 days and income tax filing and annual return filing need to be done every year. Apart from these, mandatory compliances like ‘Commencement of Business’ forms, and DIN eKYC also need to be done.
The Private Limited Companies that are registered in India have to file the ITR returns each year in Form ITR 6.
Minimum 2 number of members are required to start a Private Limited Company which can be extended to 200 members.
The Board of Directors is required to appoint a practicing Chartered Accountant within 30 days of Incorporating a Private Limited Company.
There are various of registering as a Private Limited Company like Limited Liability, Access to funding, borrowing capacity, greater capacity, easy exit, and scope of multiple opportunities.