WHAT IS A PRIVATE LIMITED COMPANY ? A GUIDE TO START A PRIVATE LIMITED COMPANY.

 

WHAT IS A PRIVATE LIMITED COMPANY? FEATURES, BENEFITS AND DOCUMENTS REQUIRED TO REGISTER

Private Limited Company is a type of business structure that is registered under the Companies Act, 2013. This type of company is owned by at least to two person, called shareholders, the liability of shareholders for the company's debts and losses is limited.

Features of a Private Limited Company:

Limited liability: The liability of the shareholders is limited to the amount of their shareholding in the company means the personal assets of the shareholders are not used to pay off the debts of the company.

Separate Legal entity: A Private Limited Company is a separate legal entity from its shareholders, it can own property in its name, enter into contracts, sue and be sued in its own name.

Number of shareholders: A Private Limited Company is required at least two and a maximum of 200 shareholders.

Separation of management and ownership: the board of directors to manage the company on behalf of shareholders is elected by the shareholders of the private company.

Ownership transfer: Shares of a Private Limited Company are transferrable from one person to another, subject to the company's articles of association.

Financial reporting: A Private Limited Company is required to maintain proper financial records following accounting standard and Ind-As as applicable and submit annual returns to the Registrar of Companies and income tax department.

Overall, a Private Limited Company is a good choice for small and medium-sized businesses in India due to its credibility, flexibility and limited liability protection for its shareholders and most of the small and medium sized businesses prefer it to register their business as a private company.

Benefits of a Private Limited Company

The benefits of forming a Private Limited Company in India are very much some of which are mentioned below:

A Private Limited Company is renowned as a credible and trustworthy business structure, which help to attract investors, customers, and business partners.

Private Limited Companies help to raise funds from a wide range of sources, including banks, venture capitalists, and angel investors. This makes it easier to obtain financing for business growth and expansion due to transparency in books of accounts.

There are several tax benefits to Private Limited Companies, including deductions for business expenses, depreciation, and other allowances. This can help reduce the company's tax liability and increase its profits.

The most relevant advantages of a Private Limited Company is that the liability of its shareholders is limited to the extent of their shareholding. This means that the personal assets of the shareholders are protected in case of any business losses or liabilities.

It is a separate legal entity, which means it can own property, enter into contracts, and sue or be sued in its own name. This gives the private company a distinct legal identity and allows it to carry out business activities independently.

A Private Limited Company is a form of business which has a perpetual existence, which means that it continues to exist even if its shareholders change over time. This gives the company stability and long-term sustainability.

A Guide to  Start a Private Limited Company

First select at least two Proposed Name of company by filing Run Form.

Also required business activity detail what will be the primary business activity of  the company.

Documents required for company incorporation

Director related Documents:

PAN card

Aadhaar

For ID proof:  DL/Voter ID/passport of all Directors (ANY ONE)

For address proof: bank statement/postpaid mobile bill/utility bill (ANY ONE)

Passport size photos of all directors

Email address and mobile numbers of all directors

Occupation of all directors

Education detail of all directors

Registered office Related Documents:

If business is run on rented property then;

a. Rent Agreement

b. NOC from Landlord

c. Utility bill not older than 2 months

*If property owner is related person and providing property without rent then a notarized consent required on a stamp paper along with utility bill.

Note: It mandatory to a Private limited company to conduct an audit as per Companies Act,2013 from a chartered accountant on annual basis irrespective of its turnover or profit.


CA KHALID REHMAN

(Chartered Accountant)

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