PRIVATE LIMITED COMPANY REGISTRATION
January 20, 2020
WHAT IS A PRIVATE LIMITED COMPANY?
A private limited company is one of the ways to start your business in India. It is considered as the best form of business which also secures your personal assets. It is the most recommended form for a startup in India to raise funding, ESOPs etc.
HOW TO REGISTER PRIVATE LIMITED COMPANY IN INDIA?
Private limited company registration required only 2 people to start. No minimum capital requirement is there, one can start with even Rs.5,000. Here are the following three important points:
- Prepare DSC and file for Name Approval: The first step is to prepare DSC and DIN. This takes some time one to two days. Thereafter, you need to file for name approval. The first word of the name should be unique and name should end with the words “Private Limited.”
- File for Incorporation: After taking name approval, the next step is to file for incorporation via spice form INC 32. Further, PAN and TAN are not required to be filed separately and the same is allotted on company formation.
- Take GST Registration: After incorporation, access your business and take necessary registration including GST registration. This is because working without tax license is illegal in India.
- Copy of PAN Card
- Aadhar Card
- Address Proof (Bank Statement, Mobile bill, Telephone bill)
- Passport Size Photo
FOR REGISTERED OFFICE
- Ownership Proof (Electricity bill etc)
- Utility Bill (Gas bill, Electricity bill)
- NOC (Download format)
PRIVATE LIMITED COMPANY REGISTRATION PROCESS
Private Limited Company registration process is very simple. The whole procedure is completely online and one need not visit our office physically to get the Company registration.
Step 1 – Arrange all required documents: The first step is to arrange all the documents and send the same over the email to us. We will check it and if everything is fine, you will be required to pay 50% advance.
Step 3 – File for incorporation: Once your name is approved, you will be required to pay the rest of the amount and then we will be file your companies incorporation. Once approval is granted, the incorporation work stands completed.
HOW TO CHOOSE COMPANY NAME FOR PVT. COMPANY REGISTRATION?
The company name is the most important part of registration & hence should be selected with utmost care. Here is the name format
ABC (Prefix) + Technologies (Suffix) + Private Limited (End)
ABC – Prefix: The prefix should reflect your brand name and should be unique. I.e. no it should not match with any existing company or trademark. The example of prefix i.e. your first word is TATA, Reliance, Hubco etc.
Technologies – Suffix: It is regarded as the second word of your company name. This should reflect your main proposed business. E.g., if you are into a technology company, then write technology, for steel business, you can use TATA Steel Ltd.
Private Limited – End: These are the ending words which are mandated by law. Every private company shall end his name with Private Limited. The words indicate that Private meaning no public is involved and limited means capital is limited.
MANDATORY REQUIREMENTS FOR PRIVATE COMPANY REGISTRATION
Nowadays, Private company registration has been eased a lot by the Ministry of Corporate Affairs (MCA), further initiatives like startup India has also boosted the company registrations all over India. Further, the company allows you to raise funding from the Angel investors, Venture Capital etc. However, to form a private limited company following are the mandatory requirements:
- Minimum two people are required to start a private limited company in India.
- Whatever is the capital amount of your company, you should invest the same within 2 months of incorporation.
- Have a basic understanding of the compliance to avoid delays and penalties.
WHO CAN START A PRIVATE COMPANY IN INDIA?
This is one of the most important questions that is asked by every person who is willing to start a company in India. Though there is no restriction on anybody to form a company in India, still, we would like to discuss some special cases:
- Students: Students over and above the age of 18 can form any type of company in India.
- Employees: Employees are generally not allowed by their employers to form a company and be a director. They may hold shares but cannot take the position as director. If you want to open a company, then check your employment agreement and you may also seek permission from the respective employer.
- The person with criminal background: Though they are not barred to form a company, however, they need to give various declarations to the ROC.
HOW TO RAISE FUNDING IN A PRIVATE LIMITED COMPANY?
Finance is a lifeline of any business and in today’s world, every competition is neck to neck, availability of good finance is needed in order to sustain. You may refer to the practical example of Flipkart, Ola etc. Hence, you must follow the following in private company in order to raise funds:
- Build a plan and a working business model: Gone are those days when you can get funding on the basis of an idea. Now, is the time, that you should test your own idea, reach an MVP and then build a strong future plan.
- Reach investors and sign the term sheets: In this step, you must reach different investors and explain them your model, future plans and how they can earn if they invest in your business.
- Prepare Documents: Once you sign the term sheet, next and final step is to prepare documents like Shareholder agreement etc.
MANDATORY COMPLIANCES AFTER PRIVATE (PVT) COMPANY REGISTRATION
There are many compliances which a company needs to follow, however, we would like to discuss a few most important compliances for a public limited company in India:
BM – Every private company needs to call minimum 4 board meeting as per the Companies Act, 2013.
Filings – A company needs to file MGT 14 from time to time. Also, needs to prepare some statutory registers.
ANNUAL – This is most important where annual filing needs to be completed within time.
WHAT ALL YOU CAN DO UNDER PRIVATE COMPANY REGISTRATION?
A PRIVATE COMPANY CAN
Do any type of business except which is specifically restricted by law.
Declare and pay a dividend (profits) to their owners/shareholders subject to CDT @ 18.5%.
Accept loan from its directors.
Can issue shares at a premium and raise funding at a high value.
A PRIVATE COMPANY CANNOT
Cannot accept deposits from the general public. Check before accepting anything in a public company.
Cannot give any loan to its director or his relative. A further company should not be used to divert funds.
Cannot issue any unsecured debentures, bonds etc.
Cannot function beyond what is mentioned in the MOA and AOA of the company.
ADVANTAGES OF PVT CO. REGISTRATION
- No minimum capital
- Secure personal assets
- Best way to start a business in India
- Raise funding whenever needed
DISADVANTAGES OF PVT CO. REGISTRATION
- Cannot accept deposits
- Strict compliances
- Yearly compliance cost
- Bank finance not available before 2 years