Private Limited Company Registration in India
Starting a new business venture is one of the important decisions that an entrepreneur will make during his lifetime and choosing the correct legal structure for your business is extremely important in setting it up for future success. Private Limited has become the most favoured form of business organisation whether you’re starting up a new tech startup, small business, consultancy, manufacturing firm, pharmacy, healthcare startup, educational institute, e-commerce store, delivery service or any other business entity in India because Pvt Ltd provides you with the benefits of limited liability, separate identity, perpetual existence and enhanced credibility among your customers, vendors, bankers and the government.
The biggest benefit of registering a company in India is that the incorporation process is now completely online. You no longer have to visit different government departments to get registrations done. The Ministry of Corporate Affairs has developed an integrated online application where you can apply and receive your Certificate of Incorporation, PAN, TAN, DIN and apply for other registrations like those mentioned above in a few simple steps. Whether you are searching for Private Limited Company Registration near me in Hyderabad, Bangalore, Chennai, Mumbai, Delhi, Pune, Ahmedabad, Kolkata, Jaipur, Kochi, Noida, Gurugram, Visakhapatnam, Vijayawada, Lucknow, Surat, Indore, Coimbatore, Chandigarh, Goa, Patna, Bhubaneswar, Guwahati, Mysuru, Nagpur, Bhopal or anywhere else in India, the procedure is same because company registration is handled by the central government through MCA.
What is a Private Limited Company?
First, it is important to understand what a Private Limited Company really is. A Private Limited Company or Pvt Ltd is a corporate body that is legally recognised as separate from its shareholders. When you incorporate your business as a Private Limited Company, it is no longer you and your partners. The company is treated as a separate legal entity. This means that the company can own property, borrow money, open bank accounts, sue or be sued in its own name. The Private Limited Company can hire employees and continue to exist beyond the lives of its shareholders or directors.
Limited liability is also another reason why so many entrepreneurs choose to register their business as Private Limited. Owners of a Private Limited Company are only responsible for the amount of money they invest in the business. If the company incurs losses or gets into debt, the personal assets of directors and shareholders are not at risk. One of the primary objectives of this legal structure is to allow entrepreneurs to take risks and build their business without the fear of losing their personal assets. Limited liability gives entrepreneurs peace of mind while allowing vendors, suppliers, bankers and investors to have more faith in doing business with you.
Private Limited Companies are also trusted more by the government and banks. It is easier for registered companies to secure loans from banks. Investors such as venture capitalists, angel investors and private equity funds prefer investing in companies rather than sole proprietorships or partnership firms. All these factors make Private Limited Company registration ideal if you’re planning to run your business in the long term.
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Why Register a Private Limited Company?
Every entrepreneur wants their business to succeed but not every entrepreneur thinks about what kind of structure their business should operate under. Did you know that the type of business you choose can greatly affect your business in the future? If you want your business to succeed in the long term, here’s why you should incorporate your business as a Private Limited Company:
Your Private Limited Company has its own identity which means that the business does not terminate upon changes in ownership. For example, if one of the shareholders decides to retire or resign, sells his shares to someone else or even dies, the business still continues to operate. This is known as perpetual succession and is another benefit of registering your business as a Private Limited Company.
Raising funds for your business will be easier if you have a Pvt Ltd. Investors are more comfortable investing in businesses that are incorporated. Why? Because when you invest in a Private Limited Company, your ownership is represented by shares. This makes the transaction safer and more legal. Many businesses also find that if they want to scale nationally or globally, having a Pvt Ltd registration makes vendors, multinational clients, financial institutions and potential partners more comfortable dealing with you.
A Private Limited Company looks more professional than other forms of business structures. Many government contracts, tenders and lucrative business deals are only open for registered companies. As your business grows, it will be easier for you to expand your operations to other cities, diversify into other lines of business and attract experienced professionals to work for your company.
Eligibility Criteria For Pvt. Ltd. Company Registration
As per the Companies Act, 2013, the following are the basic
eligibility criteria for Private Limited Company registration:
Minimum 2 directors
Minimum 2 shareholders (the same persons can act as shareholders and directors)
At least, one director should be an Indian resident who has stayed in India for a total of 182 days or more during the preceding financial year.
Company Name
Every Private Limited Company must have a unique name that is not too similar to any existing company name or trademark. The name of the company must not have any words or expression that are prohibited by the MCA.
A company name search and trademark search must be conducted to avoid rejection of your company registration application later.
Documents Required for Incorporation
Identity and Address Proof of all the proposed directors and shareholders.
Indian citizens need to provide their PAN, Aadhaar Card, Passport Size Photographs, Email Address, Mobile Number and Address Proof (such as bank statement not older than 3 months, electricity bill, telephone bill or gas connection bill).
Foreign nationals can be directors or shareholders of an Indian company. They must provide notarized or apostilled copies of their passport and address proof as per Indian law.
Address proof of the Registered Office
If the office is rented, then a rent agreement along with NOC from the owner is required. Alternatively, electricity bill or water bill can be provided.
Terms and Conditions
SPICe+ Utility Coupons
Conversion of Existing Partnership Firm or Proprietorship into Private Limited Company
After completion of above-mentioned process, if you have any outstanding utility coupons then conversion process will be completed through SPICe+ form.
Conversion of LLP into Private Limited Company
Conversion of Company under section 8 into Private Limited Company
Step-By-Step Guide on How to Register a Private Limited Company
After knowing the requirements and documents needed for registration of Private Limited Company in India, let’s see the procedure involved:
Decide on a name for your company
Think of a name that you would like to give to your company. Remember that the company name you choose will be your brand identity so choose wisely. While deciding on a name keep in mind that it should not be similar to an existing company name. It is recommended that you choose a unique name that can easily be remembered by your customers. Most companies end their name with ‘Private Limited’.
Apply for Digital Signature Certificate (DSC) by the proposed directors
Apply for Digital Signature Certificate. As the name suggests, DSC is the digital signature of the person uploading the forms and documents on MCA portal. Now since all the forms are filed online, hence DSC is mandatory.
Apply for Director Identification Number (DIN)
Apply for DIN of all the proposed directors. DIN is kind of unique identification number given by the MCA to the directors. The person with DIN can become a director in an Indian company. You can apply for DIN while applying for company registration. DIN is issued instantly these days.
Prepare Incorporation Documents
Memorandum of Association or MOA
Articles of Association or AOA
The MOA and AOA are also known as the constitution of the company. It contains the rules, regulations and objectives of the company.
File an Application for Company Registration
Integrate Utility Coupons with SPICe+ Application Form
Get yourself registered as a Private Limited Company.
The company registration process includes verification of
all the documents by the Registrar of Companies. They will verify the company
name you have applied, details of the directors and shareholders, registered
office documents, MOA, AOA and declarations along with supporting documents. If
everything is in order, you will be issued a Certificate of Incorporation by
the Registrar of Companies. On successful registration of your company, you
will receive a 21-digit identification number known as the Corporate Identity
Number or CIN.
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Registration of PAN, TAN & Opening a Bank Account
When entrepreneurs incorporate their company and receive the
Certificate of Incorporation, the new company gets its PAN and TAN issued by
the Income Tax Department. The Permanent Account Number (PAN) of the company
acts as its primary tax identification number. Entrepreneurs need their
company’s PAN Card to open its current bank account, file income tax returns,
execute financial transactions, apply for business loans, and meet various
statutory compliance requirements. Tax Deduction Account Number (TAN) is
required for companies who have to deduct tax at source (TDS) when paying
salaries, professional fees, contractors, rent, or commission.
Under different laws, businesses may also require other
registrations depending on their activities. Organizations that deal in
inter-state supplies, do e-commerce, export or import goods, or have a turnover
higher than the limit under the GST Act must apply for GST registration. If you
hire employees, you will also require registrations with EPFO and ESIC.
Professional Tax registration may be required in some states. Commercial
establishments have to get themselves registered under the State Shops and Establishments
Act. The company fulfils all its central and state registration requirements
with the registrations mentioned above.
Opening a Current Account
After receiving the Certificate of Incorporation, the
entrepreneurs should open a current bank account in their Private Limited
Company name. The company is a separate legal entity distinct from its
directors and shareholders. Therefore, all receipts and payments should be made
through the company bank account, and no financial transactions should be made
in the directors’ personal accounts. Maintaining separate accounts for the
business makes accounting easy and helps entrepreneurs during the statutory audit
of the company. Tax authorities may ask for the previous years’ account
statements when assessing the company’s income tax returns.
To open a current account, banks typically require the
following documents – Certificate of Incorporation, PAN Card of the company,
MOA and AOA, board resolution authorising opening of the bank account, proof of
registered office, and identity documents of proposed signatories. Banks may
ask for additional documents as per their internal processes. Once the account
is opened, entrepreneurs can accept payments from customers, transact business,
invoice for services, and manage all financial operations through the current
bank account.
Registering for GST
GST, or Goods and Services Tax, has replaced a multitude of
central and state taxes with a single tax system throughout India.
Entrepreneurs don’t compulsorily require GST registration for every newly
incorporated Private Limited Company. However, most businesses voluntarily
register for GST as it allows them to claim input tax credits, work with bigger
corporations, and conduct inter-state businesses.
If your business has an annual turnover higher than the
prescribed limit or conducts any notified activities, GST registration becomes
mandatory. Any enterprise involved in ecommerce or online services, supply of
goods and services across state lines, export or import, logistics and
transportation services, manufacturing, consultancy, software development,
digital marketing, educational services, healthcare support, or professional
services should consider registering for GST at the earliest. Obtaining GST registration
also gives your business credibility among suppliers and customers, especially
if you are running a B2B business.
MSME (Udyam) Registration
Most Private Limited Companies in India are eligible to
apply and register as Micro, Small or Medium Scale Enterprises (MSME) with the
Government of India and receive Udyam Registration. MSME registration is
voluntary for any newly incorporated company. However, there are several
benefits and incentives that the government offers only to registered MSME
businesses.
Registered MSMEs can access loans under the priority sector
lending category, get lower interest rates on some loans, receive government
subsidies, access working capital under the government’s credit facility,
upgrade technology with government assistance, participate in the government’s
public procurement policy, get protection from delayed payments, and claim
several benefits announced by the central and state government. Startups,
consulting firms, software development companies, educational institutions,
manufacturers, engineering businesses, hospitals, diagnostic centres, and other
service-based businesses can quickly gain benefits by registering as an MSME.
Startup India Registration
Businesses with a focus on innovation can also apply and get
recognition under Startup India by the Government of India. Companies who
fulfil the conditions mentioned by the government relating to age, turnover,
and innovation are eligible to apply for Startup India recognition. Apply
through the Startup India portal to gain benefits that the government offers to
supported startups. Benefits include tax exemptions (under certain conditions),
compliance relief, IP facilitation centre, funding support, incubation support,
networking programmes, and fast-track patent examination.
Startup India recognition is useful for technology startups,
fintech companies, artificial intelligence (AI) businesses, biotechnology and
healthcare startups, ed-tech companies, solar energy companies, e-commerce
businesses and many other businesses based on innovation. Recognition under
Startup India allows your business credibility and support from the government
during its initial years.
Cost Involved
The cost to incorporate a Private Limited Company depends on
several factors such as authorised share capital, number of directors,
professional service charges, digital signature charges, state-specific stamp
duty, and additional registrations applied for at the time of incorporation.
Stamp duty charges vary from state-to-state, so entrepreneurs incorporating a
company in Maharashtra, Karnataka, Telangana, Tamil Nadu, Gujarat, Uttar
Pradesh, Delhi, West Bengal, Kerala, Andhra Pradesh, Rajasthan, Madhya Pradesh,
Odisha, Bihar, Punjab, Haryana, Assam, Chhattisgarh, Jharkhand, Uttarakhand,
Goa and other states will notice a slight variation in the government charges
mentioned above.
You can also save costs by preparing certain documents
yourself and avoiding professional fees. Most entrepreneurs engage Chartered
Accountants, Company Secretaries, or lawyers to draft the incorporation
documents for them, prepare the Memorandum and Articles of Association, verify
compliance with various regulations, and file the documents with correctness.
Professional assistance might cost you more during registration, but it will
save you from document rejections, legal issues, and future compliance hurdles.
Time Taken to Incorporate
Thanks to digitization, companies can be incorporated within
a week or two. It takes about 7-15 working days to register a Private Limited
Company if you have all the required documents in order and do not receive any
objections from the Registrar of Companies. Companies face delays if their
proposed name is too similar to that of an existing company or trademark,
identity documents do not match, registered office documentation is not
complete, or if ROC asks for additional information.
Entrepreneurs who double-check their documents and respond
quickly to any queries raised by ROC can get their companies incorporated
without delays. If you have product launches or investment meetings scheduled
or plan to sign commercial contracts within a few weeks, start the company
incorporation process in time.
Annual Compliances to be Met
Private Limited Company registration is just the first step.
There are certain compliances every Private Limited Company must follow
annually to stay compliant with Indian law. Private Limited Companies must
comply with various compliances under the Companies Act, 2013 and Income Tax
Act. Compliances include – maintaining books of accounts, preparing annual
financial statements, appointing statutory auditors, conducting Board Meetings,
organising an Annual General Meeting (AGM), maintaining statutory registers,
filing annual returns with ROC, and filing income tax returns on time.
Companies registered under GST are required to file GST returns regularly, and
businesses deducting tax at source must file their TDS returns and issue TDS
certificates.
Entrepreneurs should note that compliance is not a one-time
legal requirement. A well-maintained record of statutory compliances and
documents enhances transparency, helps businesses during investor due
diligence, makes banking and taxation processes easier, and is good corporate
governance.
Mistakes to Avoid While Incorporating
New entrepreneurs often face delays in company registration
because of small mistakes they make while applying. The most common mistake
entrepreneurs make while registering a company is finalising a name that’s too
similar to another registered company or already trademarked. Since name
similarities are one of the first things verified by ROC, businesses should do
their research before deciding on their company name.
Other mistakes include submitting documents with outdated
addresses, incorrect identity documents, incomplete documentation of registered
office address, and mismatch in details provided on PAN, Aadhaar, or other
identity documents. Businesses should also not incorporate a business structure
because it’s cheaper. Businesses planning to scale, raise investments, or
operate throughout India are better off registering as a Private Limited
Company over a Sole Proprietorship or Partnership.
Business owners often forget about compliances after company
registration. Neglecting to file annual returns on time or failing to maintain
statutory records can result in hefty fines, conviction of directors, and
future legal troubles for your business.
Hire Professional Help
Company registration in India is now easier than ever with
the MCA’s digitisation efforts. However, incorporating a company is a legal
process that requires entrepreneurs to draft documents, adhere to various
regulations, and submit filings. Professionals like Company Secretaries,
Chartered Accountants, and corporate lawyers have years of experience helping
businesses incorporate. They guide entrepreneurs on the best shareholding
structure, help you determine authorised capital, apply for GST registration, plan
taxation, design an accounting system, maintain statutory records, and help
with annual compliances.
Finxter can also help you incorporate your Private Limited
Company online. Get in touch with our Chartered Accountants and experienced
business lawyers to start your business incorporation process.
We Have Helped Businesses Register across India
Final Thoughts
The Private Limited Company registration in India is ideal
for businesses that require long-term scalability. Unlike other business
structures, Private Limited Companies do not have many restrictions on the
business’ objectives, can raise investment by issuing shares, offers its
shareholders liability protection, separates ownership from management,
continues to exist even if the ownership changes, provides greater credibility
to businesses, and is attractive to investors.
The Ministry of Corporate Affairs made it quick and easy to incorporate a Private Limited Company through its integrated online filing platform. Entrepreneurs can register a company by choosing a unique company name, preparing the necessary documentation, completing registrations, and fulfilling annual compliances. Whether your business is based in a metro city or a small town in India, starting a Private Limited Company gives your business the legal recognition, financial credibility, and operational independence it needs to establish strong roots and grow.