A private limited company is privately held for small businesses. The benefit of having a private limited company is that there is limited liability However, it is difficult to liquidate such a company because shares can only be sold to shareholders in the business and it also and restricts shareholders from publicly trading shares. It is a highly recommended way to open a business in India.
Registering a company has various benefits such as:
Limited liability: when a company goes through financial distress, the personal assets of the members will not be used to repay the amount as the liability on the members is limited.
Perpetual succession: the company can continue to exist after the death, the bankruptcy of members or change in members
Easy funding: it is the easiest model to gather angel investors or venture capitalists.
Better image and creditability in the market: the details of the company is available in an open online database and therefore increases creditability.
Easy to attract employees
Taxadvantage: income tax is lowest on companies, in India. 15% For Manufacturing Units And 22% On All Other Companies.
FDI is allowed: 100% FDI Is allowed therefore any foreign entity can invest in Pvt. Ltd. company
Easy to attract investors
Increased ability for development.
Management and ownership separation
Separate legal entity: Being the creation of law, the company is a juristic and separate legal person, different from its shareholder/director. Which means that it has the capability to sue and be sued.
Essentials for registration:
Minimum two people
Indian Resident director (at least one)
Capital (minimum 1 lakh)
Director identification number (DIN) for all directors
Digital signature certificate (DSC)
The procedure of registration:
Unique name: every company needs to register with a unique name and therefore it should be made sure through research that the name you would like for your company is not already registered. RUN (Reserve Unique Name) web services by MCA for reserving the name of the company can be used for this purpose.
Application for DSC and DPIN: the DSC is a digital signature used to sign the online documents and DPIN is the directors' pin number it is important to collect these before starting a company.
MOA and AOA submission: MOA is the memorandum of association and AOA is the article of association, these contain the by-laws through which a company will be governed and these need to be drafted and submitted before the company can start functioning. These are both filed with the MCA.
Form and documents: the forms should be duly filled and documents attached make sure it is verified by a professional then file the form to ROC then make the payment.
Incorporation certificate: The certificate of incorporation mentions significant information about the company such as CIN number, the name of the company, date of incorporation, etc. it is issued by the registrar at MCA after due filling of all the document and forms after verification.
Bank account: if you wish to open a bank account in your company’s name, that can be done after receiving the incorporation certificate and completing al the requirements for incorporation.
Necessary compliance required by all the private limited companies:
GST registration: all the Pvt. Ltd. Companies are supposed to get their GST registration within 30 days of incorporation. It is required when the turnover crosses 40L or 20L in certain states.
GST return: when a company is registered with GST it is important to file the tax returns, it can be filed quarterly, monthly or annually depending on various scenarios.
Income tax/ statutory and MAT audit: income tax audit has to be filed every year under sec. 44 AB. It aims at ascertaining the compliance of various provisions of the Income-tax Law and fulfilling other requirements of the Income-Tax Law. Statutory and MAT audits should also be done whenever listed.
Accounting: maintain a proper book of accounts is of utmost importance for all the pvt. Ltd. Companies. These books should represent the fair state of affairs of the company. Accounting is necessary for the statutory audit, Annual filing and IT return filing which is mandatory. These books of accounts should be audited by the auditor appointed by the company.
ROC annual filing: filing has to be done at least 3 times a year. submissions of documents of financial statement, i.e. balance sheet, P&L account in form AOC 4 and annual return in form MGT-7 have to be filed.
IEC registration: if your private limited company is engaged in import and export it needs to register the import-export code, it has lifetime validity. Importers are not allowed to proceed without it and exporters are deprived of certain benefits due to lack of it.
Trademark registration: registering any name for the company does not provide protection for that name, we need a trademark for the same to protect the name and the reputation attached with that name or logo of the company.
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