How to Start Private Limited Company

In Newspaper, on TV, on big hoardings or on any website, whenever we read about a company, a term definitely passes through our eyes that is Private Limited i.e. pvt. Ltd. . Means the registration of that company or organization is done in the form of Private Limited.

It simply means that that company is the personal property of someone whose private or shareholder is its owner. Culture and startup culture has increased a lot all over the world, and this trend is in full swing in India too.

Company Type

S.NO Company Type
1 One Person Companies (OPC)
2 Private Companies
3 Public Companies
4 Companies Limited by Shares
5 Companies Limited by Guarantee
6 Associate Companies
7 Unlimited Companies
8 Government Companies
9 Holding and Subsidiary Companies
10 Companies in terms of Access to Capital
11 Public Financial Institutions
12 Foreign Companies
13 Charitable Companies
14 Dormant Companies
15 Nidhi Companies

People across the country are thinking of doing something as their own, as they are moving forward, there is a boom in this ecosystem of business.

The existence of different business like sole proprietorship, limited liability company and private limited company has started increasing.

How to start a private limited company

Understand in easy language what is a private limited company: A Private Limited Company is a Joint Stock Company established under the Indian Companies Act 2013 or under any other Act.

Private Limited Company Requirement
Minimum Capital 100000 (Rs 1 lakh)
Director 2 Director
Maximum employees 200 employees

In this model, the founders of the company set up the company on their own volition, whose minimum capital is Rs 1 lakh. At least 2 people are needed to open a private limited company and the maximum can be 200 employees in a private limited company.

This private limited company is not allowed to sell its shares to the public or among the common people. If a company has all this, then that company has to use Private Limited in its name.

What is the specialty of private limited company

In a private limited company, the liability of the company’s members or shareholders is limited. That is why suppose if there is any loss, then the members of the company can sell their shares and compensate for the loss.

Because even if there is a loss, there is no risk on the personal share. The company has an existence in the eyes of law, due to which its identity remains even after the death of its founding members.

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The company will continue to exist forever even after the death of the members of the company or if the company is bankrupt. There can be 2 directors and maximum 200 employees in a private limited company.

Advantages of Private Limited Company

Talking about the benefits of a private limited company, the biggest advantages of this are:

  • Only 2 people can start this together.
  • 7 people are needed to open the same public limited company.
  • There is no need to index your members in a private limited company such as: email id, phone number, address or share value.
  • To give loan to its members in a private limited company, permission is not required from the government.
  • In a public limited company, it is compulsory to take the approval of the government to give loans to its members.
  • There is no restriction of any kind on salary and appointment in private limited company.
  • Like a public limited company, a private limited company does not have to issue its prospectus because a private limited company cannot sell its shares to the public, so it is not necessary to tell the public about itself.

For knowledge, you should know that prospectus is the document that contains all the information about the company such as: who are the directors of the company, what is the profile of the company, how much money is involved in the company and all other basic information.

How to register a Pvt Ltd Company

If you want to start a company to start business, then you can register your company as a private limited.

Things that should be taken care of while getting the registration done so that there is no mistake while getting the registration done because even a small mistake in the registration and document can cause a big loss.

What are the important rules for starting a private limited company

Private Limited Company

The company is run by the directors

Yes, whenever we hear about the designation of high profile like: CEO, founder or director, things seem quite fascination to us, don’t we.

But if you are doing your business then in your own company this designation can also be associated with your name for you.Minimum 2 directors are required to run a private limited company.

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In which one can be you yourself and the other member can also be your family member or business partner. Now as a director of the company, two things must be kept in mind:

  • Every director has a DIN (director identification number) which has to be taken from the Ministry of Corporate Affairs.
  • One of the 2 directors should be a citizen of India.

Name is also required for registration

It is very basic that the identity of any work is its name, that is why you have to keep a name while establishing a company. But while thinking of the name of a private limited company, 3 things are important like:

  1. Main name of the company.
  2. What work or what kind of activity does the company do.
  3. Use of Private Limited Company.

Even thinking of the name of the company, you will have to put a good special mind because 5 to 6 names have to be sent to the Registrar of Companies at the time of roc because no other company of the same name can be registered.

And the name of your company should not even match with other company.

Must also have a registered office address for the company

Yes, when you will put the application for registration of the company in the registrar of the Ministry of Corporate Affairs, then a register office address will also have to be given for your private limited company.

It is important to give the office address so that you can tell from where your company is doing the work. Where else people will communicate with you, as well as any document courier, the latter should be a legal address to dispatch.

Digital Signature Certificate

Digital Signature Certificate is also required to form a Private Limited Company.

Digital Signature Certificate paper is equivalent to Signature Certificate which is your company’s digital proof of identity so that you can prove your identity online and on the Internet.

Because we sign physical documents by hand but digital signature has to be put on any digital document or e-form. Digital Signature Certificate shows that the signature made on behalf of the company is genuine.

What are the documents required to register a Private Limited Company?

In order to register a private limited company, the documents that will be required include PAN card, and passport, apart from this, ration card, Aadhar card, voter ID card or driving license will have to be shown.

For residence proof, it is necessary to have a bank statement or an electric bill. Wherever you are opening an office, having a notarised rental agreement and noc taken from the property owner as well as sale deed or property deed is compulsory.

SPICE

The Ministry of Corporate Affairs has introduced SPICE (Simplified proforma for incorporating company electronically) form to register a Private Limited Company.

By filling this application, your 4 purposes will be solved such as director identification number, reservation of company name, incorporation of a new company and application for pan and tan.

Before the year 2015, many different types of forms had to be filled to register the company, but now they have been merged together. That means work has become easier.

Private Limited Company Registration Fee

Private Limited Company Registration Fee
Digital Signature Certificate Rs 2000
DIN (director identification number) Rs 1000
Stamp Duty Rs 2500
Notary Fee Rs 500-1000
Government Fee Up to Rs 1200
GST 18%
C.A, Lawyer and other Professionals charge Rs 3000-4000
Total (Maximum Expenditure) Rs 15000 (Approximate)

To register a private limited company, many different types of fees and charges have to be paid, including Rs 2000 for digital signature certificate, Rs 1000 for DIN (director identification number), stamp duty of Rs 2500,

Up to Rs 500-1000 Notary fee, government fee up to Rs 1200, GST of 18% is levied and for getting all these work done 3000-4000 rupees ca, lawyer and other professionals charge. If totaled, then the maximum expenditure comes up to Rs 15000.

If all your documents are ready, then it will take 7-10 days to get all the work done. Since the Ministry of Corporate Affairs has introduced a single application form to make things easier, things have become even easier.

What is MOA and AOA

Moa (Memorandum of Association) and AOA (Article of Association) both these things are very important for running a private limited company.

Talking about MoA (Memorandum of Association), it has to be submitted while registering the company, in which it is told that the relation of the company with the shareholders of the company is the case and what is the main objective of forming the company.

AOA (Article of Association) tells how the company will operate and what will be its purpose. While making these two documents, it is necessary to consult a professional and they have to be drafted very carefully.

Once the Certificate of Incorporation is obtained, the company can start business in its name. Remember that the paid-up share capital is always deposited in the current account of the company.

Along with forming a company, comes some legal responsibility such as: within 1 month of the formation of the company, a chartered accountant has to be appointed who can advise the company in the legal issues of the company.

Apart from this, itr-6 of income tax has to be filed every year as well as annual return and director identification number KYC also has to be filled by the board of directors every year.

Private limited company can also be closed

After knowing all this, the next question comes whether a private limited company can also be closed, then its answer is yes.

But for this it is necessary to agree with all the board of directors and for this the company has to issue voluntary winding up resolution which has many rules.

Apart from this, the shares of a private limited company can also be sold out.

Apart from this, if the company is found guilty in any fraud or fraud case or its involvement in any illegal work emerges, then through the jurisdiction the government can also close the company.

  • Anand Automotive Private Limited
  • Hindustan Coca-Cola Beverages Pvt Ltd
  • Jaquar & Company Private Limited
  • Mother Dairy Fruit & Vegetable Pvt Ltd
  • Parle Products Private Limited

These are the names of some popular companies in India which are running their business successfully. If you are also dreaming of leading the market with a unique idea, then you can start with a private limited company.

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