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Overview
A company that is a legal entity in its own right, separate from the identity of its owners, and has special status in law’. The assets, liabilities, and profits belong to the company, not the owners. A private limited company is incorporated under the Companies Act 2003. It is registered with the Ministry of Corporate Affairs and issues shares to its shareholders. It can also be known as a private company limited by shares. A private limited company is owned by its shareholders, the people who hold shares in the business. A company can be owned by just one individual who has sole control over all decisions made about the business. Where there are multiple shareholders, each one has voting rights in proportion to the number of shares they hold. If one shareholder has more than 25 percent of the shares, they are treated in company law as ‘persons of significant interest’ because they can influence decisions made about the business.
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Benefits
Easier access to growth funds As we mentioned earlier, private limited companies have access to a wider range of funds for growth, including bank loans, venture capital, and crowdfunding because investors see limited companies as a lower risk. You can also raise capital by selling shares in your business, although you cannot offer them for public sale.
Personal income flexibility If you are an owner or director of a limited private company, you can pay yourself a combination of salary and dividends. As dividends are taxed at a lower rate, this will reduce your tax bill and provide a more tax-efficient method of remuneration compared with salary alone. There are also other ways to take money out of the business as a director, including bonus payments, pension contributions, directors’ loans, and private investments. These offer various degrees of tax efficiency. Sole traders do not have the same flexibility. They take income from the profits of the business and the income is taxed at standard personal income rates.
Protected business names When you register your business name with the Ministry of Corporate Affairs, the name is protected and cannot be used by any other business. Anyone wishing to register a name must check with the Ministry of Corporate Affairs and the IPR Government website before applying. If the Ministry of Corporate Affairs recognizes a matching name or a name that is very similar, they will advise the business and refuse to grant permission. This level of protection makes it difficult for other companies offering copies of your products to ‘pass off’ their products as genuine.
Lower taxation Sole traders pay income tax and National Insurance contributions on the profits of the business through an annual self-assessment tax return. The rate of income tax and National Insurance contributions is equivalent to that of a private individual and includes the same personal allowances. A limited company pays Corporation Tax, which is based on income minus allowable business expenditure. However, Corporation Tax rates for smaller businesses are lower than the equivalent income tax rates and companies can claim a wider range of allowable expenditure. Although you will also pay personal income tax and National Insurance contributions as a director or owner of a limited company, you have greater flexibility in the way you pay yourself, which can lead to savings on your personal tax bill.
Higher business profile A private limited company is perceived as more substantial than businesses run by a sole trader. When customers place orders or award contracts, they want to be confident that the supplier has the resources to provide a reliable service. The perception is also shared by investors, so it may be easier to attract funding as a limited company.
Reduced risk of personal liability As a sole trader, you are personally liable for all the debts and liabilities of your business. In a private limited company, you and any other shareholders are only liable for debts up to the value of your shares. That reduces the risk of having your personal assets seized to pay for the debts of the business if it fails.
Company pension provision In a limited company, you may be able to take advantage of a company pension scheme as well as invest funds in a private personal pension scheme. Sole traders have to make their own provision by joining a personal pension scheme and making regular payments.
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LIMITED LIABILITY PARTNERSHIP
REGISTERED OFFICE CHANGE
STATUTORY AUDIT
ADD AND REMOVE OF DIRECTOR
Documents Required
Those are the important and mandatory documents are required to be uploaded online
KYC OF THE PROPOSED DIRECTORS
RENTAL AGREEMENT (NOTARIZED)
BANK ACCOUNT STATEMENT OF THE PROPOSED DIRECTORS (LATEST MONTH)
ELECTRICITY BILL (LATEST MONTH)
DIGITAL SIGNATURE CERTIFICATE OF DIRECTORS
NO OBJECTION CERTIFICATE FROM THE PREMISES OWNER
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Frequently Asked Questions
Minimum 2 number of members are required to start a Private Limited Company which can be extended to 200 members.
Authorized capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid up capital is the number of shares issued by the company to shareholders. Authorized capital can be increased any time after incorporation to issue additional shares to the shareholders.
No, new company registration is a fully online process. As all documents are filed electronically, you would not need to be physically present at all. You would need to send us scanned copies of all the required documents & forms.
Private Limited Companies are taxed at 30% plus the surcharge and cess as applicable.
Yes, a private limited company must hire an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company, given that penalties for non-compliance can run into lakhs of rupees and even lead to the blacklisting of directors.
The companies registered in India are required to file the MCA annual return each year informs AOC 4 and MGT 7.
GST registration is mandatory for certain businesses. Companies dealing with e-commerce operations or any other interstate activity and companies with turnover of more than Rs. 40 Lakhs are required to obtain the same.
To file form ADT-1 & INC-20A to the Registrar of Companies for the appointment of first Auditor within 30days and Commencement of Business within 180days from the date of incorporation. Late fine also levied for delay filing Rs 300 per month.
Yes, foreign nationals or entities can be partners in a Limited Liability Partnership (LLP) under certain conditions. However, it is important to comply with the specific regulations and requirements of the jurisdiction where the LLP is registered. Generally, foreign nationals or entities may need to fulfill additional documentation and legal procedures, such as obtaining necessary permits or visas, and complying with foreign investment laws. Additionally, the partnership agreement may need to address any specific restrictions or conditions related to foreign partners. Therefore, it is essential to consult with legal professionals familiar with the jurisdiction's laws and regulations regarding foreign participation in an LLP.