What are the advantages and disadvantages to register as Private Limited Company?

Starting a Pvt. Ltd Company is not an easy task. You have to think about company registration as well. The legality will make your existence valuable. Before commencing a business, many things run into our minds. One question that appears to everyone’s mind is whether the incorporation of a private limited company is beneficial or not? Does the company registration have some limitations?

So, in this article, we will be learning all about the advantages to register as a Private Limited Company. But before that, lest having an overview of Private limited company registration.

Overview: Private Limited Company

Private limited company registration is made legally with limited liability or lawful protection for its shareholders but that places limitations on its ownership. A Pvt. Ltd Company is a company that is personally held for small businesses. The responsibility of the members of a Pvt. Ltd. is limited to the number of shares individually held by them. Shares of private limited cannot be publicly sold or purchased.

Private Limited Company is the easiest and very popular form of startup India registration India. It can be registered with at least two members. Limited liability security to shareholders, the capacity to build equity funds, separate legal entity status. Make it the most favored type of company for millions of small and medium-sized companies that are family-owned or professionally handled.

Minimum Requirement for Pvt. Ltd. Company:

• A minimum variety of two Directors who are adults.
• One of the Directors of a personal limited company has to be an Indian Citizen and Indian Resident.
• The other director(s) may be a Foreign National.
• It is likewise required to have shareholders of an employer.
• The shareholders may be natural individuals or an artificial individual entity.

How to register a company?

Registration of a Pvt. Ltd company in India is full of an online process. Recently the MCA has renewed the earlier SPICe form with a new web form called SPICe+ (SPICe Plus). So, Incorporating a Private Limited Company is even more comfortable now.
Now the Incorporation of a Private Limited Company, with an Individual application for Name reservation, Incorporation, DIN allotment, Mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account. Along with company name approval adding on the suffix" PVT LTD". Preparation of all the documents. And submit to the Registrar of the company, and get a certificate of incorporation. Now we will look at documents that are mandatory to apply for online company registration.

Important documents for company incorporation 

• Share capital amount and recommended ratio for holding a share
• A brief description of the company and the business.
• Name of the city where the registered office of the company is located. ( Delhi, Kolkata, Chennai, Mumbai)
• Ownership and sale deed (In case your own premise).
• The ID Proof of the Directors and Shareholders (PAN Card).
• Address proof of the registered office like Electricity bill, telephone bill, etc.
• Address proof of the all Shareholder i.e. Voter ID, Passport, Driving license, etc
• The email address of the directors and shareholders.
• 2 Passport size photos of directors & shareholders.
• NOC of Landlord in case of Rented Property
• Passport in case NRI director or shareholder

That an overview of Private Online Company Registration. But how it can benefit us in the future or what are the advantages of registering it? For more details, you can get connected to CA/CS near you.

Advantages of Private Limited Company

Tax-efficient

It’s well understood that a limited company is also likely to be tax-efficient than a sole trader, and that is one of the many purposes it’s a successful business model. A Pvt. Ltd. Company director will normally take the highest amount that is not being taxed in the tax year.

Easy Transfer of stocks or shares

Shares of an enterprise limited through stocks or shares are transferable via a shareholder to every other person. The transfer is straightforward compared to other companies or a partnership.

Security due to Limited Liability

Private Limited Company has this characteristic of limited business liability of all the shareholders. The liabilities are restricted to their shares only. This characteristic secures the personal assets and income of shareholders at times of any economic crisis met by the company. Also, it provides the company more deliverance for taking risks.

Long Existence

 Private companies are not influenced by the status of their own when it proceeds to their existence. Death or failure to proceed if the owner does not invalidate the proceedings of the company.

Separate entity

In the eyes of the law, limited enterprise commercial enterprise is a separate entity to its owner. This is another terrific benefit of putting in a limited corporation, as opposed to a sole trader. A sole dealer and its proprietor are seen as one entity. A limited company director has the protection, must the enterprise fail. It may enter into contracts and is responsible for all the commercial enterprise actions. So, a limited company director will don't have any attachment to the agency’s actions apart from their share of the company.

No minimum share capital

For a private company, the earlier least number of the share capital was Rs. 1,00,000, but now there is no such least capital compulsion. 

Limitation of Pvt. Ltd. Company

Compliance Formalities

A private limited company needs a range of compliance post-incorporation. All companies are expected to continue board meetings, general meetings, get the accounts audited, maintain a statutory register, and file an annual return with the Ministry of Corporate Affairs each year. This is important and necessary formalities.

Division of Ownership

A major limitation of a private limited company is that it needs a minimum of two persons to act as Directors and shareholders. So, any sole entrepreneur who wants to start and run a business by him/herself cannot start a private limited company. But that's good as well there is no limit to sharing capital.

Personal Liability

The company itself is entirely liable for its debt and has unlimited liability. Just the members of a company enjoy limited liability protection. 

Winding Up of Company

The procedure for winding up of a company can be twisted, time-consuming. But easy to register because of the most popular company structure. 

Conclusion

There is a common understanding that incorporating a private limited company is an affordable affair and it is even economical to own a private limited company as there are many necessary annual compliance demands. So, Pvt. Ltd. Company Registration fees are not much just make the plan and apply today.
LegalPillers is offering the best of the service in online company Registration. Has the best Online CA Services in India. For more details call us at 9625279785 or 9267941961, however, you may reach us at info@legalpillers.com.

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