Private Limited Company

A Private Limited Company is a business entity held by small group of people. It is registered for pre-defined objects, owned by a group of members called shareholders and managed by group of people called directors or board of directors. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.

Shareholder is the owner of the company and directors are the management of the company who manage the business of the company. Shareholder and directors of the company can be the same persons or different persons also.

Private Limited Company is favored structure by startups because of stability and growth prospects offered by this form. Further, it ensures separate legal existence from its members. So, it can execute contracts and legal proceedings in its own name. Moreover, a company’s status is unaffected from any change in members and management.

Separate managerial board i.e. Board of Directors is beneficial for members interested for investment purpose. Where Board works on remuneration, the members receive profit sharing in form of Dividend.

It also offers various funding options in form of private equity, ESOP and more. This makes it more suitable for external funding options. And thus, it is more preferred by VCs, Angel Investors, and other outside funding agencies compared to any other business structures. It also is rather preferred by banks and lending agencies because of the credibility that it holds as a corporate structure.

A private company is eligible to take benefit of registration under Startup India Scheme of Government of India. This scheme avails multiple benefits including tax exemptions for the recognized startups.

• It restricts the transfer ability of shares by its articles.
• In a Private Limited Company the number of shareholders in any case cannot exceed 200.
• When profit distributed to owners, it is again taxed in the form of dividend distribution tax.
• Higher number of compliance formalities on yearly basis as compared to partnership and proprietorship form of business.

Minimum two directors are required to run a company. Maximum at any point there can be 15 directors only.

Shareholders of a company are also known as members. To register a Private Limited Company in India, minimum two members are required. Here, an individual or even a body corporate can become a member of the company. There is a ceiling limit to the number of members in a Private Company. The same is provided as maximum of 200 members.

No, the whole pvt ltd company incorporation process is online. You can send the scanned copy of all the required incorporation documents via e-mail. All the forms and documents are filed electronically and even signed digitally

You don't need a proper office address to incorporate a company. You can register your residential address as a registered office address of your business with MCA (Ministry of Corporate Affairs) for which some address proof along with the NOC (No Objection Certificate) has to be filed with the prescribed form.

NRIs only allowed to incorporate limited companies in India and the private limited company is ideal for NRIs. Also, there is no requirement to obtain the prior approval from the government or RBI. But, in order to register a private company at least one director must be a resident of India.

A private limited company is a separate legal entity. To start the business, a private limited company needs to apply for PAN of the firm.

TDS deduction rules become applicable to private limited company from day one of incorporation and thus same needs to be applied at the time of incorporation of company.

Businesses providing services needs GST registration when there financial turnover in a financial year exceeds 20 Lacs and for other the limit is Rs. 40 lakhs (Rs 10 lakhs for NE and hill states).

Name of the company is the identification of business in the world. In order to protect that name of the business, so that no one copies that name to take advantage of the reputation built by company, it becomes necessary to get the name of the business trademarked and protected from being copied in future.

There are several advantages of going ahead with MSME registration:

• MSME Business can get a loan at a cheaper rate
• There are several tax benefits to the industries operating as MSME
• MSMEs are allowed for MAT or minimum alternate tax that can be carried for up to 15 years
• Government has also given special benefits to MSMEs by opening certain tenders only for industries operating under MSME
• It is easier for MSME to get credit
• After successful MSME registration, the cost of a patent or setting up industries gets reduced as there are many concessions for such industries.
• Businesses registered under MSME have a higher preference for a government license.