Private Limited Company

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Private Limited Company

A private limited company is a voluntary association of not less than two and not more than 200 members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures.

What distinguishes a Private limited company from earlier form of business is its limited liability and its separate legal existence than its owners i.e. shareholders.

Minimum Requirement to start a Private limited company

1. Minimum Two Shareholders

2. Minimum Two Directors

3. No Minimum Capital Requirement

4. Director Identification Number for all Directors

The directors and shareholders can be the same person.

Process of Incorporation of Private limited company

1. Get Digital Signature for Directors

2. Get Directors Identification Number for all Directors

3. Reserve name of your choice as per the naming guidelines.

4. Drafting of MOA/AOA for the Company.

5. Payment of Fees and Stamp Duty

6. Filing of Forms

7. Your Company is now Incorporated!

advantages of a Private limited company

Limited Liability

In case of financial distress in company business, the personal assets of owner shareholders will not be at risk of being liquidated.

Separate Legal Existence

Private Limited Company has got separate legal existence than its owners unlike in case of proprietorship and partnership where business and owners are the same.

Perpetual Succession

Company Business not affected by the death of the owners i.e. shareholders. Company continues to exists till the time it is wound up as per the provisions of the Law.

Greater Borrowing Capacity

In today’s era more and more capital is required to run and scale up the business activity. Private Limited Company always hold greater capacity to borrow from financial institution and other investors.

Scaling Possibilities

Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability.

Greater Credibility

Private Limited Company fetches higher credibility from creditors, suppliers than proprietorship and partnership since various information is available in public domain.

Higher capital

Maximum number of shareholders allowed is 200. Hence, Private Limited Company can raise higher capital from its shareholders.

Quality Manpower

It is easy for Private Limited Company to hire and retain quality manpower since beginning of the business. There are various ways to reward employees. Company’s brand value will get increased because people come to know about the company very well.

Annual Compliance for Private Limited Company

Companies Act, 2013

Mandatory statutory audit is required to be conducted by the appointed Statutory Auditor as per the provisions of the Companies Act, 2013.

Mandatory annual returns are required to be filed with Ministry of Corporate Affairs every year within time limit given from the closure of financial year.

Income Tax Act

It is mandatory to file Income Tax Return of the Company under the Income Tax Act, 1961.

If there are carried forward losses, then it is advisable to file Income Tax Return within the due date specified in the Act.

Further, if the turnover exceeds the specified limit, then Tax Audit may be required to be conducted under provisions of the Income Tax Act, 1961.

If payments are made where Tax is required to be deducted at source, then TDS returns are required to be filed quarterly.

State VAT Act

If registrations are taken under State VAT Act, then specified returns are required to be filed as per the frequency as applicable to the business. Under Maharashtra VAT Act, the frequency of filing business returns could be monthly, quarterly or Half-yearly.

Service Tax

In case the Company is providing service and Service tax registration is taken, then Service Tax returns are required to be filed once in six-months. Service Tax payments are required to be done on monthly basis.

Our Pricing Tables

Comparison chart for choosing Business Organization Form

Sole Proprietorship  
  • Small trader or Manufacturer
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
  Partnership Firm     
  • Family Business
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
Limited Liability Partnership
  • Professional Service Providers
  • Moderate Time
  • Yes
  • Yes
  • Less
  • Difficult
Private Limited Company
  • Start up or Growing Companies
  • Moderate Time
  • Yes
  • Yes
  • High
  • Easy

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