What do I need to know about forming my Private Limited Company?

What is a Private Limited Company?

A Private Limited Company is a type of business entity you can register that is recognized under the Companies Act 2013. The primary objective of a Pvt Ltd Co is to limit the personal liability of its owners. This means that the shareholders are only liable for the amount they have invested in the company and are not personally responsible for its debts or obligations.

Do I need a Private Limited Company?

A Private Limited Company isn't always required. Still, many small business owners choose to incorporate a Pvt Ltd Co to protect their personal assets in case the company faces financial difficulties or legal issues. Having a Pvt Ltd Co can also help you to get DPIIT startup recognition, get tax benefits, enter into contracts, get funding, and get necessary government and permits.

What does Private Limited Company Incorporation mean?

When you incorporate a Private Limited Company, you need to submit SPICe+ forms to the Ministry of Corporate Affairs, along with SPICe e-MOA, e-AOA & CA/CS/Lawyer declaration. Once it's approved, a separate entity is formed having its own Identification No., PAN, TAN, etc, you can use this separate entity to record your business expenses, take on business debts, file taxes, obtain government licenses, and more—and this is what gives you liability protection.    

How easy is it to form a Private Limited Company?

You may be slightly intimidated by the idea of forming a legal entity like a Private Limited Company, especially if it's your first time. All you need is an understanding of what your business will do, how you plan to run it, a unique name for your business, and an address for registration which can be your home address also.

Benefits of Registering a Private Limited Company

Some of the benefits of registering a private limited company are easy share transferability, ease in raising funds, increased credibility, separate legal entity, perpetual existence, limited liability of shareholders

Benefits of Registering a Private Limited Company:

1. Separate Legal Entity: A Private Limited Company is a legal person with its own legal rights and obligations that are separate from its owners or those who run it. This means it has some of the same legal rights as a person, such as the ability to enter into contracts, sue and be sued, and own properties.
2. Perpetual existence: Perpetual existence means that a company is designed to continue its operations indefinitely, regardless of changes in ownership or management, unless dissolved or liquidated voluntarily or by legal action.
3. Limited Liability of Shareholders: This means that the shareholders are only liable for the amount they have invested in the company and are not personally responsible for its debts or obligations.
4. Clarity in Management and Ownership: The owners of a private limited company are called shareholders whereas the people responsible for managing the company's affairs are called directors. Directors are appointed by shareholders of the company. 
5. Ease in Raising Funds: A private limited company is the most reliable business structure for any startup to raise funds as it is required to meet certain compliances as per the Companies Act, 2013. 
6. Increased Credibility: Constituting a private limited company improves credibility amongst suppliers, lenders, and investors by being registered as a corporate entity.
7. Easier to attract business partners: Top CEOs, CFOs & CTOs are willing to work more in a startup under the business structure of a private limited company than any other business structure.

Procedure of Registering a Private Limited Company

The procedure of incorporating a Private limited Company in India involves the following steps:

Step 1: Application for Digital Signature

As per guidelines, all applications to the Registrar of Companies are filed in digital format and are therefore required to be authenticated using a digital signature of the authorized signatory. Proposed directors must acquire a Class 2 or Class 3 DSC for digital signing of incorporation documents. Chartered ONE offers Digital Signature service, fulfilling this requirement of obtaining a DSC for ROC fillings.

Step 2: Applying for Name approval

The next step is that you'll need to submit a SPICe RUN form, which is part of the larger SPICe+ form. Chartered ONE ensures you secure your dream company name during an initial availability check. However, if your preferred name is already registered, we provide unlimited alternative company name searches to help you find the perfect fit.

Step 3: Filing SPICe+ Form for Incorporation

Application for Incorporation is drafted using SPICe+ form, a simplified proforma for incorporating the company electronically, along with SPICe e-MOA & e-AOA. Chartered ONE makes your company's incorporation easy and simple.

Step 4: Receive DIN, COI, PAN & TAN card

Upon successful verification by the ROC, you will receive a Director Identification Number, a Certificate of Incorporation, a PAN card, and a TAN card

Step 5: Opening of Bank Account in India

Upon obtaining a PAN, the Company will be eligible to open a current bank account. Chartered ONE offers multiple banks to choose from, with the process being entirely remote & streamlining the experience for you.

Step 6: Issuance of Share Certificate

Upon opening the bank account, the shareholders must obtain a share certificate from the Company.

Step 7: PT, ESI, EPF Registration

ESI registration is required when the employee count is 9 and EPF registration is required when the employee count is 20. A voluntary registration option is also available even if below the threshold limit. Professional Tax is applicable in some states based on the earnings of the employee. Ensure a smooth ESI, EPF, and PT registration for your Company with Chartered ONE's expert guidance.

Document required for Private Limited Company Registration

Checklist of Documents Required for Private Limited Company Registration

1. Self Attested PAN copy of all directors and shareholders
2. Self Attested Aadhaar copy of all the directors and shareholders
3. Passport size photo of all the directors and shareholders
4. Rental agreement copy if the registered office is rented.
5. Copy of utility bill (water/gas/electricity) of the rented property
6. No Objection Certificate from the owner of the property

What is the Government fee for Private Limited Company Registration?