Good things never come easy and so is this setting up a successful business. An entrepreneur’s mind is always programmed to bring out the best in his business, right from the name of the business to the clients the business deals with. Likewise, the type of corporate entity to be chosen is one of the major decisions a business could ever deal with. There have also been instances wherein the companies change from one entity to another during the course of the business. For instance, a number of businesses change from sole proprietorship to private limited company or partnership company.
While there are a number of business entities like the sole proprietorship, partnership, LLP (Limited Liability Partnership), the private limited company has been the most preferred and the most conventional type of entity preferred by the businesses.
Advantages of Private Limited Company:
Businesses that intend to grow quickly and expand across, prefer private limited companies as it offers a wide range of advantages over the other entities like:
- A private limited company is a separate legal entity and is different from its members. The company can purchase property of its own and can sue and be sued in its own legal capacity
- A company has perpetual succession and lives on forever unless it is legally dissolved.
- A private limited company exhibits limited liability wherein the members of the company are accountable for the debts only to the extent of shares they hold.
- The shares held by the shareholder are easily transferable to another person.
- A private company is relatively in a better position to seek funds from banks and financial institutions as compared to other corporate entities.
Requisites for the Registration of a Private Company:
- A private limited company must have a minimum of 2 and a maximum of 200 shareholders.
- There should be a minimum of 2 directors and there can be a maximum of 15 directors.
- In the case of a private limited company, there are no mandatory requirements for minimum paid-up capital
- The directors and shareholders have to furnish their proofs of identity with government authorized identity cards such as PAN (Permanent Account Number) card or Aadhar card
- The proof of address such as telephone bills, electricity bills that are not older than two months from the date of submission is to be presented.
- Address proof of the registered office such as water bills, electricity bills to be submitted
- If the office is situated on a rental space, a NOC from the owner and the rental agreement is to be submitted
- If the office is spaced out in its own property, the property deed is to be enclosed.
Private Company Incorporation Procedure:
Private limited companies can be incorporated in the following ways:
Here’s how to start
The DSC (Digital Signature Certificate) can be obtained by following these steps
Obtaining the DSC is a requirement for directors and shareholders. The DSC became inevitable after the company registration process went online and digital signatures had to be uploaded to the MCA portal (Ministry of Corporate Affairs).
Obtaining DIN (Director Identification Number) for the Directors
The DIN is a unique 8-digit number allotted to the directors by the MCA. Every director in the company is supposed to hold a DIN.
Name of the Company
Business names are important because they stay with the company forever. A form INC-1 must be used to apply for the same which requires the applicant to list about five to six names in order of preference. In choosing the name, care must be taken not to copy existing trademarks or companies.
For the purpose of company registration, the name thus applied for is held for 60 days.
Certificate of Incorporation
The SPICe (Simplified Proforma for Incorporating a Company Electronically) form can be used to apply for the certificate of incorporation after the above formalities have been completed, along with forms for the Memorandum of Association and Articles of Association. A Certificate of Incorporation is issued along with a Permanent Account Number (PAN) and Tax Deduction Number (TAN) after the RoC (Registrar of Companies) verifies the documents.
To carry out the company’s financial transactions, an account must be opened in an authorized bank in the name of the company after receiving the Certificate of Incorporation.
Incorporate a company first and foremost to give it legal recognition as a business entity. Credibility and goodwill would undoubtedly be bestowed upon the company as a result of this. Our experts can make the registration process much easier than it looks by guiding you through the complicated process of registering a company.