What is a private limited company?
Section 2 (68) of The Companies Act, 2013 defines a private limited company as a separate entity that is held privately and provides limited liability. It does not freely transfer its shares to the public like other public companies. In a private limited company, all business profits and liabilities belong to the company itself and stakeholders may not be responsible for debts incurred by the company.
What We Offer
- 2 DSC & 2 DIN,
- 1 RUN Name Approval
- 1 lakh authorized capital,
- Incorporation fee,
- Stamp duty*,
- MOA & AOA,
- Incorporation certificate,
- PAN & TAN
- ESIC registration & PF Registration,
- Professional Tax Registration,
What Documents will you need to register your Company Online?
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of the latest bank statement/telephone bill
- Scanned passport-sized photograph specimen signature
- Scanned copy of No-objection certificate from the property owner
- Scanned copy of Sales/Property
Types of private limited companies –
- Private limited company by shares
A private company limited by shares is limited in capital based on the numbers of shareholders who are owed money on their shares. For these companies, the liability of shareholders is limited by the MOA (memorandum of Association) to the number of their shares or the amount which remains unpaid. The shareholders are not liable to pay more than their share capital invested in the company.
- Private limited company by guarantee
In a private limited company limited by guarantee, the liability of the individual shareholder is limited to the amount he guarantees in the MOA. Therefore, they can be liable only up to the amount that they have guaranteed. In addition, they may invoke this guarantee only in case the company is permanently shut down.
- Unlimited companies
An unlimited company is a separate legal entity. Unlimited corporations are businesses that have no restrictions on the liability of their members. Each member’s liability may extend over the entire company’s debts. It means members’ personal assets can pay off debts incurred by the company.
Who can set up and run a private limited company?
A private limited company can have a minimum of two directors and a maximum of fifteen directors. In addition, at least two shareholders can have a legal distribution of shares of a private limited company. A total number of two hundred shareholders is acceptable.
Similarly, it requires at least two directors to manage a private limited company. They can be shareholders of the company. According to Section 2 (clause 68) of The Companies Act, 2013, any private limited company may have paid-up capital of 1 lakh rupees minimum or higher, which is specified by the government.
Advantages of private limited companies-
Opportunity for acquiring foreign investment-
Foreign investors trust private limited companies more because of strict compliances, data availability on the site and the fact that they follow the ROC norms. In addition, a foreign entrepreneur can become a director of a private limited company, provided there is at least one director living in India. This makes foreign investors keener to invest in private limited companies rather than any other type of business entity.
Separate legal entity-
Private limited companies are separate and independent and changes or replacements in shareholders or directors do not affect them. Any private limited company is established under a legal constitution. It means even if all members of the company leave or the company goes bankrupt, it still exists according to the law.
Can own properties-
A private limited company can own any type of movable or immovable property. Assets and liabilities of the company are typically the responsibility of the company. In case of dissolution of the company, its liabilities are discharged in a specified sequence to the creditors, which reduces the individual liability of the shareholders.
Greater borrowing capacity-
A private limited company can enjoy multiple avenues for borrowing funds. Banking and financial institutions often prefer to offer financial assistance to private limited companies. They have greater confidence in this type of business entity because of the transparency, compliance and partial data availability on government websites.
Tax compliances and financial reports for a private limited company-
Income tax filing-
There are two different categories a private limited company falls under for income tax filing purposes—domestic and foreign. Each company files income tax returns and pays tax on the profits it makes within a given financial year. You can file the tax returns online once the income tax department of India issues a due date. It is important to note that online tax return filing requires a digital signature at the time of uploading.
Annual ROC filing-
ROC annual filing is a record of audited financial statements and annual returns by the private limited company to ROC (Register of Companies). Under Sections 129 and 137 of The Companies Act, 2013, every company requires filing financial statements and submitting annual returns under Section 92. You may file both the records between 30 days to 60 days from the conclusion of the annual general meeting.
Balance sheet and profit-and-loss statement-
A private limited company maintains a balance sheet and profit & loss statement to determine if the company has enough assets to meet the financial obligations. A balance sheet is a record of what the company owes and owns at a specific period. The purpose of a balance sheet is to calculate a company’s net worth and provide an insight into the company’s financial status.
The profit & loss statement is an income statement that includes the revenues, costs and expenses incurred during a specific time. This statement provides information about a company’s ability to turn a profit by increasing revenue and reducing costs.
