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Private Limited Company Registration Online

Live your dream by starting your new venture. Learn how to register a private limited company in India.

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Description

There are many ways in which you can start your business in India. The popular forms in which people in India do business are following:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Partnership
  • Private Limited Company
  • One Person Company

While all the above forms are perfectly legal, each one of them have a set of pros and cons for doing business. Of all these legal forms, Private Limited Company is the most popular one. The figure below shows the composition of nature of companies incorporated in India as on 31 December 2020. As of 31 December 2020, there are a total of 14,96,733 registered legal entities. Out of that, 80% is private limited companies.

How to register a private company in India? Private Company statistics.

What are the differences between Private Limited Company, One Person Company and LLP?

Before jumping on to the differences, one common thing about all is that they are governed by the Ministry of Corporate Affairs (MCA), Government of India. Since these entities are governed, people have greater confidence in doing business as compared to an unregulated structure such as Sole Proprietorship or Partnership.

The figure below highlights the key differences between these three legal forms. To summarize, both private limited company and LLP require at least 2 persons to start the business. One person company, as the name suggests, consists of one single person. This does not mean you need to find a co-founder to start your business. To comply with the requirement of 2 persons, people usually make their close relatives (parents, spouses) or friends as the other member. 

Why should I opt for Private Limited Company, One Person Company or an LLP? 

Some of the other advantages of a regulated corporate form are as follows:

  • Perpetual existence – which means the business will continue to exist even if you don’t. As you know creating great business takes time and at times more than one lifetime. Groups such Tata, Reliance Industries etc are run by second generation entrepreneurs. Having a legal structure helps you create a perpetual existence of your business.
  • Fund raising – having a regulated corporate structure gives more confidence to lenders (banks and financial institutions) and investors. Hence, they would always prefer a legal entity over an unregulated entity for providing funds. 
  • Limited liability – a legal entity functions separate from the owners. This means company or LLP can own properties on its name, enter into contracts etc. Any liability occurring from the activities of the legal entity is restricted to the legal entity and does not pass on to the owners. This can help Founders to ring-fence themselves from any potential liability of their business. 
  • Tax benefits – unlike individuals, corporate entities are subject to tax at different rates. Tax rates vary for a company and a LLP. But the effective tax rate can be lower as compared to a high net-worth individual doing business as sole proprietorship. In some cases, the tax rate can be as low as 15%. 

             

 

How to register a private limited company?

Simply put, company incorporation is a 5 step process. The process is summarized below:

Step 1 - Get Director Identification Number and Digital Signature

This is a prerequisite for applying for company incorporation. Director identification number is a unique ID provided by the Government for individuals acting as directors. Digital signature can be obtained from any external agency.

Step 2 - Obtain name approval from Government

Unlike human names, company names cannot be same. Therefore, before company is registered, the name of the company must be unique. Hence, under this step, the preliminary approval of the name is taken.

Step 3 - Prepare your charter documents i.e. Memorandum of Association and Articles of Association

These documents define the governance of the company and describes the key aspects of the entity such as object of set-up, key businesses to be undertaken, capital structure, first shareholders etc.

Step 4 - Company Incorporation

Once all the above steps are completed, the application for company incorporation can be filed with the MCA. The MCA then issues the incorporation certificate of the company (similar to a birth certificate) after verification of the documents submitted by the applicant.

Step 5 - Obtain PAN and GST number for your company

PAN is mandatory for income tax purposes and GST registration is mandatory for providing any services or trading in goods. Both are essential for starting your business. 

What is Covered
  • Filing of E-forms with the Registrar of Companies (ROC)
  • Director Identification Numbers (2 nos.) 
  • Digital Signature Certificates (2 nos.)
  • Name approval (INC-1) including one resubmission
  • Drafting of Memorandum of Association (MOA) & Articles of Association (AOA)
  • Issue of Certificate of Incorporation
  • PAN Application
  • TAN Registration
  • Includes Government Fees & Stamp duty upto Rs. 1 Lakh Authorized Capital
What is not Covered

Please note that our service excludes: 

  • Appointment of foreign national or Foreign Body Corporate as a director OR business that need approval from RBI, SEBI or IRDA for incorporation
  • If the Authorised Share Capital of the Company exceeds INR 1,00,000 additional charges may be levied by ROC. 
Information guide

You should keep the following documents ready:

  • Passport size photos of directors
  • Address proof of directors
  • Photo ID proof of directors
  • Specimen signature
  • Self declaration about your directorship in other companies
  • Rent agreement of your registered office
  • No objection certificate from the owner
FAQs
  1. For company registration, do I need to be physically present during the process?

No, there is no need to be physically present during the process of company registration as the incorporation procedure is completely online.

  1. Who can become a director in a Private Limited Company?

Any person who is 18 years of age or above can be a director in the company. There are no conditions regarding the citizenship or residency of the person. An NRI (non-resident Indian) or Foreign National can also become a director in the Private limited Company. 

  1. What is the minimum number of directors required to start a private limited company?

At least 2 directors are required to start a private limited company. Usually, people who are starting a company alone and do not have a business partner, can appoint their spouse, parents, siblings etc. as the other director. There is no legal requirement which restricts appointment of a closer relative or a friend as a director. 

  1. What is the time required for setting up a Private Limited Company.?

If you have all the documents ready, the procedure will not take more than 15 days. However, since the process involves filing of documents with the Government Authorities and verification, there could be some delays..

  1. What is an Authorised Share Capital? 

Authorised Share Capital means an authorisation by the company upto which the company can issue shares to its shareholder. For example, if the authorised share capital of a company is Rs. 1 lac, then the company can issue shares to the shareholders for an amount anywhere between Rs 1 to Rs 1 lac. 

  1. What is minimum authorised share capital required to register a Private Limited Company?

There is no minimum capital requirement to set up a Private limited Company.

  1. What is the Memorandum of Association (MOA) and Articles of Association (AOA) of a private limited company?

MOA is a document that contains all the fundamental information of the private limited company. It also contains the main objective of the company i.e. the purpose for which the company was registered. 

AOA contains rules and regulations required to govern the functions of the company.

  1. What will be the liability of the shareholders of a private limited company?

The shareholders have limited liability in the co. i.e., they are liable to the extent of their shareholding in the company. .

  1. Can NRIs or Foriegn Nationals be a director in a private limited company?

Yes, a NRIs and Foriegn national can become a director in the Private Limited company., provided that at least one director on board should be a resident of India.

  1. What does the separate legal entity mean?

It means that the functions of the company are separate from the owners of the company. A company is capable of owning a property or signing a contract in its own name.

  1. Is it possible to convert a One Person Company or LLP into a Private Limited Company?

Yes, a One person company or an LLP can be converted into Private Limited Company., provided it should meet all the conditions prescribed under the law. 

  1. Is stamp duty payable during registration of a private limited company?

Yes, stamp duty charges are payable at the time of incorporation. It is imposed by the state in which the registered office of the company is proposed to be located. However, the stamp duty charges are not very high.

Estimate Time to Complete

15 days

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