WHAT IS A PRIVATE LIMITED COMPANY?
For an entrepreneur to establish his/her business, the most prominent form of Legal Structure or corporate entity is a Private Limited Company. If you wish to start a venture, then getting your company registered comes in priority. This company registration is governed by the Companies Act, 2013 & Companies Incorporation Rules, 2014.
In India, many-a- start-up businesses, register their companies as Private Limited Company as there are several benefits like the ease in incorporation, ease in raising funds, ease in finding investors, separate legal identity, limits the liabilities of its shareholders, business recognition, etc.
A minimum of 2 directors and 2 shareholders are required for the registration of a Private Limited Company. Recently, the Ministry of Corporate Affairs (MCA) has done some major changes and made the process of registering a Private Limited Company very simple and 100% online. Now, you can register your dream company from the comfort of your home. As of November 2020, over 20 lakh companies have been registered in India and among them, around 13 lakh companies are still active.
Vakilgiri helps thousands of start-ups each year to register themselves as a Private Limited Company and the process of incorporation takes less than 10 days. We have a dedicated team of professionals who takes you through the process like a joyride.
In this article, we will be focussing on all the things related to the registration of a Private Limited Company, like documentation required, advantages of Private Limited Company registration, online private limited company registration process.
ADVANTAGES OF PRIVATE LIMITED COMPANY REGISTRATION
1. No Minimum Capital Requirement
For incorporating a Private Limited Company, there is no minimum capital requirement as per the Companies Act, 2013. Thus, you can form your company with any authorized share capital.
Having your company registered as a Private Limited Company gives more credibility to the investors. All the information is provided on a public database thus making it more authentic.
3. Ease in Fund Raising
Since this entity is highly credible, there is ease in raising funds to expand the business of your company. You can raise funds from Venture Capitalists or Angel Investors.
4. Separate Legal Existence
Once your Private Limited Company registration is complete, a separate legal entity is formed. This separates itself from its directors and shareholders. Thus, the assets and liabilities of directors/shareholders are different from that of the company’s
5. Owners’ Limited Liability
In case of any unforeseeable distress, the personal assets of directors or shareholders will not be used to pay up the debts of the company or vice versa. Thus, a Private Limited Company gives its owner/s a limited liability.
6. 100% Foreign Direct Investment
Up to 100% FDI is allowed in a Private Limited Company, which means, any Foreign Entity or person can invest in your company.
DOCUMENTS FOR REGISTERING A PRIVATE LIMITED COMPANY ONLINE
Here is the list of documents required for online company registration in India:
1. PAN Card
PAN Card of shareholders and Directors are required. If either of the shareholder or directors are of a foreign nation, then they must provide a valid passport.
2. Identity Proof
For Identity Proof of Shareholders and Directors, Aadhar card and Voter ID/ Passport/ Driving License are required.
3. Address Proof
As an Address Proof, the latest Telephone Bill or Electricity Bill or Bank Account Statement (not more than 2 months old) of Shareholders and Directors are required.
The latest Passport size photograph of all the Shareholders and Directors is required while registering a Private Limited Company.
5. Business Address Proof
The latest Electricity Bill or Telephone Bill (not older than 2 months) of the registered office address is required.
6. NOC from owner
No Objection Certificate (NOC) from the owner(s) of the registered office (if any) is required.
Note: In the case of an NRI or Foreign Nationale, documents of director (s) must be notarized or apostilled. (There are separate charges of registration in such cases).
STEPS FOR REGISTERING A PRIVATE LIMITED COMPANY ONLINE IN INDIA
The process of registering a Private Limited Company is 100% online and can be summed up in the following steps:
1. Application of DSC & DIN :
All the documents that need to be submitted to the MCA are in online mode, thus it is mandatory for all the directors and shareholders to have their respective DSCs. Digital Signature Certificates are the online copy of your signature that is used for signing the documents while incorporating your company.
DIN or Director’s Identification Number is a unique number that is allotted by the Ministry of Corporate Affairs (MCA) to all the directors of the company.
2. Name Approval :
For an entrepreneur, the first step towards starting his/her venture starts with finding a suitable and apt name for their company. It should be crisp & can represent the nature of your business. MCA requires at least 3 unique names for your Private Limited Company and allots the one which is available or is not taken.
This process takes 1 day to complete.
3. MOA & AOA submission:
After your given Company’s Name is approved by the MCA, you are required to draft an MOA (Memorandum of Association) and an AOA (Article of Association). In case you find any issues while formulating the MOA & AOA, you can always seek help from Vakilgiri’s professionals who have helped thousands of entrepreneurs like you in registering & starting their ventures.
NOTE: Some other essential forms like Part-B, SPICE+ forms are also required while incorporating your company.
4. Certificate of Incorporation:
After submitting all the documents mentioned above on the MCA portal, once your company gets registered, you will receive a Certificate of Incorporation (COI) which acts as proof from the department that your Private Limited Company is registered. CIN number is also mentioned in the COI.
5. PAN, TAN and Bank account:
Once your Private Limited Company registration online is complete on the MCA portal, you will receive the e-copy of your company’s PAN, TAN & ESIC.
These documents are required for opening a CURRENT Account under your Company’s Name in any Bank. After this, you can officially start your business operations. CONGRATULATIONS!!
You are now your own BOSS!!
IMPORTANT THINGS FOR PRIVATE LIMITED COMPANY REGISTRATION
As per the rules & guidelines provided by the Government of India, some compliances are required to ensure the smooth running of your business. In case a company fails to maintain compliances, it can lead to a penalty or even the disqualification of the directors of the company.
Don’t be scared. This is where Vakilgiri- Your Legal Consultant comes into play. We help you with the accounting and maintaining the statutory compliances of your dream company at a very low price as we understand the importance of your hard-earned money.
Other than the below-mentioned compliances, there are others that need to be done depending on the company’s timeline. Vakilgiri also assists you in increasing the authorized capital, changing registered office addresses, change in directors, and other trivial matters.
1- GST Registration
A Private Limited Company is required to get their GST Registration Number within 30 days of their Business Incorporation in India. It is required when the turnover of the company is more than INR 40 lakhs.
NOTE: In case of a Special Category State, or if the business deals with supplying of goods (intra-state) or the goods and services are of online nature, GST Registration is required for a turnover of Rs. 20 lakhs.
2- GST Return
After getting registered under GST, a Private Limited Company is required to file GST returns. GST returns can be filed as per the forms you are filing on a monthly, quarterly, or yearly basis.
Proper books of accounts representing the accurate & fair view of the nature and state of affairs of your Private Limited Company must be maintained. Accounting is mandatory for statutory audit, Annual filing, and Income Tax return filing. Such account books are audited by an auditor appointed by the company.
4- Statutory Audit
Within the 30 days of incorporation of a Private Limited Company, it is mandatory to appoint an Auditor to conduct an audit of its financial statements for each of the financial years. Irrespective of its sales turnover or the nature of capital or business, a company registered under the Companies Act, 2013 is required to maintain its accounts book and have it audited each financial year.
5- MAT Audit
Even after earning substantial book profits and paying handsome dividends, many companies do not pay any taxes due to various tax benefits/concessions provided under the Income Tax laws. Thus, to identify such companies as “zero tax companies”, MAT i.e. Minimum Alternate Tax was introduced. It is mandatory for the Pvt Ltd Co. to get their accounts audited under Minimum Alternate Tax.
6- Income Tax Audit
A Private Limited Company is required to get its tax audits done under section 44AB.
7- ROC Annual filing
Every year, three forms are mandatorily required to fill by a Private Limited Company. Submission of documents of Financial Statement such as Balance Sheet, Personal & Loan Account (Form AOC 4), and annual return (Form MGT-7). The report on the auditor’s appointment to ROC is submitted in Form ADT-1.
8- TradeMark Registration
Trademark Registration (TR) is important if you want your Private Limited Company to get full protection for Business Name, Logo, Brand Name, etc.
Getting your company registered by the MCA doesn’t provide any protection to the name or brand name. Thus, to make your company, a brand, Trade Mark Registration is a must.