Private Limited Company Registration
Private Limited Company Registration Procedure :-
A Private Limited Company is a type of company incorporated under the laws of Companies Act and is one of the most popular forms of business entities. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company. Unlike business entities such as a Sole Proprietorship and Partnership, it has a separate legal status from its shareholders and directors who have limited liabilities for the debts and losses of the company. It has the rights to own properties. It usually has the words 'Private Limited' at the end of its name.
Important Features of Private Limited Company :-
1. Formed and registered by complying with the prescribed formalities prescribed under the Act.
2. Legal person in the eyes of law distinct from its members .
3. Separate Person having its own rights and obligations .
4. Restriction on right of transfer of shares .
5. Can sue or be sued in its own name .
6. Enjoys the benefit of perpetual succession. Death or insolvency of shareholder(s) does not effect the continuity .
7. Foreign Direct Investment is permissible
Basic Setup Requirements for Private Limited Company :-
1. Minimum 2 Shareholders + 2 Directors
2. Minimum initial paid-up capital is INR 100,000
3.A registered office address
4. Director Identification Number (DIN) and Digital Signature Certificate (DSC) for Directors
Tax and Private Limited Company :-
Indian Private Limited Company is considered a tax resident; it is therefore eligible for tax under Income Tax Act, 1961. Tax rate of 30% on the total income and surcharge of 5% if the income exceeds 10 Million plus 3% Education cess & Secondary and Higher Education cess on the total of income tax and surcharge.
Advantages :-
1. No personal liability of shareholders for debts and losses of company
2. The company, as a separate legal entity, does not cease to exist if one or more of its shareholders die.
3. Personal assets of shareholders are protected since they are not personally liable for debts and losses of company
4. There are less legal restrictions
Disadvantages :-
1. It is governed by rules and regulations stipulated in the Companies Act, 1956. Violation of rules and regulation will result in penalties and prosecution
2. Greater disclosure and administration requirements, and therefore operation costs are generally higher
3.Companies prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives
4. Companies can be more expensive to set up
5. Companies must maintain ongoing compliance with Registrar of Companies (‘ROC’) and Income Tax Department
6. Winding up of a company is a time taking and a costlier process .
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