Company registration - Private Limited or LLP or OPC
There are 4 types of companies that any person can register in India. Its very important to select a right kind of structure to fulfil all your objectives. The 4 types if companies are:
- Private Limited Company
- Limited Liability Partnership
- One Person Company
- Proprietorship
The basic difference between the 4 structures are :
| Private Limited company | Limited Liability Partnership | One Person company | Proprietorship |
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Features |
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| Cost | |||
| Rs 14999 all inclusive for Private Limited company | Rs 12999 all-inclusive for LLP | Rs 12999 all-inclusive for OPC | Rs 2499 all-inclusive for proprietorship |
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Time Taken to register |
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| 15 days | 15 days | 9 days | 2 days |
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Annual Compliance Cost |
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| The compliance cost of Private Limited Company with a turnover of Rs 20 lakhs is Rs 18000/annum | The compliance cost of Limited Liability Company with a turnover of Rs 20 lakhs is Rs 7000/annum | The compliance cost of One Person Company with a turnover of Rs 20 lakhs is Rs 18000/annum | The compliance cost of Private Limited Company with a turnover of Rs 20 lakhs is Rs 5000/annum |
| Steps and Documents | |||
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Steps to register a Private Limited Company: Apply for digital signatures of directors and shareholders Apply for Name of the company Fill in form SPICE + , E-MOA and E-AOA Submit the forms |
Steps to register a Limited Liability Partnership: Apply for digital signatures of partners Apply for Name of the company Fill in form LLPIN Submit LLP form 3 |
Steps to register a One Person Company: Apply for digital signature of director and shareholder Apply for Name of the company Fill in form SPICE + , E-MOA and E-AOA Submit the forms |
Steps to register a Proprietorship: Apply for Udyam registration Apply for GST registration |
How to register a Private limited Company in India
A private limited company is a type of company that is limited by shares and has a limited number of shareholders. Private limited companies are popular in India because they offer a number of benefits, such as limited liability for shareholders, tax benefits, and the ability to raise capital from investors.
The process of registering a private limited company in India is relatively simple. The following steps are involved:
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Obtain a Director Identification Number (DIN)
A DIN is a unique identification number that is required for all directors of Indian companies. You can apply for a DIN online at the Ministry of Corporate Affairs (MCA) website.
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Obtain a Digital Signature Certificate (DSC)
A DSC is a digital certificate that is used to sign electronic documents. You can apply for a DSC online at the National Informatics Centre (NIC) website.
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Reserve a business name
You must reserve a business name before you can register your private limited company. You can reserve a business name online at the MCA website.
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Prepare the Memorandum and Articles of Association
The Memorandum of Association (MOA) and the Articles of Association (AOA) are the governing documents of your private limited company. The MOA sets out the purpose of the company and the AOA sets out the rules and regulations that govern the company. You can prepare the MOA and AOA yourself or you can hire a lawyer to do it for you.
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File an incorporation application
Once you have prepared the MOA and AOA, you can file an incorporation application with the MCA. The incorporation application must be filed online at the MCA website.
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Obtain a Certificate of Incorporation
Once your incorporation application has been approved, you will receive a Certificate of Incorporation from the MCA. The Certificate of Incorporation is the official document that confirms the incorporation of your private limited company.
Costs of registering a private limited company in India
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Government fees – The government fees for registering a Company in Rs 5500 for upto 1 Lakh share capital. And Rs 3000 for DSC
- Professional fees – The professional fees is Rs 9499. So the total fees for company registration including government fees is Rs 14999
- Accounting fees – The yearly compliance fees for a company with turnover upto Rs 20 lakhs is approximately Rs 25000/year.
Benefits of Registering a Private Limited Company in India
There are many benefits to registering a private limited company in India. Some of the key benefits include:
- Limited liability: Shareholders of a private limited company are only liable for the debts of the company up to the amount of their investment. This means that your personal assets are protected in the event that the company goes bankrupt.
- Tax benefits: Private limited companies are subject to a lower tax rate than other types of companies in India. This can save you money on your taxes.
- Ability to raise capital: Private limited companies are able to raise capital from investors through the issue of shares. This can help you to fund your business growth.
Conclusion
Registering a private limited company in India can be a great way to start or expand your business. If you are considering doing so, it is important to understand the process and to seek professional advice to ensure that you comply with all of the relevant laws and regulations.
Frequently Asked Questions
Minimum 2 directors and 2 shareholders are required for company registration. The directors and the shareholders can be a same person. Directors and shareholder can be different people too.
Even companies or LLPs can be the shareholder of the company.
Yes company can be registered at residential or commercial address. You need to have a electricity bill and the NOC of the owner.
The company cannot be registered at the virtual address.
Yes anyone can a be a director in the company if he meets the following conditions:
- Age should be more than 18 years
- Not criminally prosecuted
- Of sane mind
- Not bankrupt
The minimum capital can be Rs 1 as well. The authorized capital should be minimum Rs 1 lakh.
Please refer our blog on this here. But the basic capital to register a name are:
- It should be unique
- There should be no trademark registered of the given name
- It should have a prefix and activity word
- It should not have words like finance, minister etc
- For words like Global, Corporation, World the capital should be more that 25 lakhs
The income tax rate of the company is 25% plus cess. The dividend distribution tax is also applicable for a Pvt ltd Company.
As per the government rules you can be a director even if you are a employee.
But you need to check your employment agreement to see if your company policy allows you to be a director.
The minimum cost to maintain a company even if it does not have ay sale is as follows:
Statutory Audit – Rs 12000
ROC Filing – Rs 7000
Income Tax Return – Rs 4000
The other compliances like GST returns, PT returns, Director KYC will be charged extra by any consultant.
Please refer our blog here
The government fees for company registration is as follows:
Name Approval – Rs 1000
Stamp Duty – Rs 1500
Pan and Tan – Rs 160
Digital Signature – Rs 3000