Table of Contents
Private Limited Company - All questions answered
Startups that have multiple founders and are planning to raise funds in the near future should register a Private limited Company.
The minimum requirements are:
- Minimum 2 people required to register a company
- Both the persons should be 18years or above
- Both should have Pan and Aadhar
- You should have a residential or commercial address proof to register a company
The documents required are:
- Pan and Aadhar of directors and shareholders
- Utility bill and the NOC of the owner of the proposed registered office address.
The steps to register a company in India are as follows:
- Apply for the digital signatures of the directors and shareholders. Pan and Aadhar is mandatory for this. Video and message verification is mandatory.
- Apply for the name of the company. You can either get the name approved before the start of process or get the name approved during the process.
- Upload SPICE+ application on the MCA website. You need to attach documents like MOA, AOA, KYC of directors and certification of a Chartered Accountant or a Company Secretary or a Lawyer.
- You will get the CIN if application is approved by the government.
The annual compliances are:
Statutory Audit – To be done once every year. You need to appoint a chartered accountant for this. The charges of the chartered accountant usually start from Rs 10000/year.
ROC Filings – To be done once every year. AOC 4, MGT 7 and ADT 1are the forms to be filed every year.
Income tax returns – To be filed once every year. You need to pay 25% taxes on the profits earned.
TDS returns – To be filed once every 3 months.
GST returns – To be filed once every month.
The benefits of the Pvt Ltd company are:
- Its the most credible of all LLP, OPC and Proprietorship.
- You can issue equity shares only in the Pvt Ltd company
- Employees trust Private Limited the most.
- The tax rate for Private ltd is 25.17%
The disadvantages are:
- It is not suitable if you are experimenting with ideas
- The tax rate is a bit high
- The annual compliances are higher than LLP
- Its difficult to close a company
- You cannot take unsecured loan from friends or third parties except financial institutions
The cost to register a Private Limited company is Rs 6499. This includes:
- 2 DIN and DSC
- MOA, AOA and CIN
- Government fess
- Professional fees
- PF and ESIC registration
- Pan and Tan
The charges start from Rs 17000/year for company whose turnover is not more than Rs 20 lakhs/year. It includes the following:
- ROC Filings – MGT 7 and AOC 4
- Income Tax filings
- Dedicated accountant for 1 year
- Appointment of Auditor
- DIR 3 KYC of 2 directors
- Payroll for 3 employees
Terms and conditions:
- Statutory audit fees to be paid to the auditor directly.
Limited Liability Partnership - All questions answered
Startups that have multiple founders and are not planning to raise funds in the near future should register a LLP. Its most suited for family businesses.
The minimum requirements are:
- Minimum 2 people required to register a LLP
- Both the persons should be 18years or above
- Both should have Pan and Aadhar
- You should have a residential or commercial address proof to register a Limited Liability Company
The documents required are:
- Pan and Aadhar of partners and designated partners
- Utility bill and the NOC of the owner of the proposed registered office address.
The steps to register a LLP in India are as follows:
- Apply for the digital signatures of the partners and designated partners. Pan and Aadhar is mandatory for this. Video and message verification is mandatory.
- Apply for the name of the LLP. You can either get the name approved before the start of process or get the name approved during the process.
- Upload LLP form application on the MCA website. You need to attach documents like KYC of partners, subscriber sheet and consent letter and certification of a Chartered Accountant or a Company Secretary or a Lawyer.
- You will get the LLPIN if application is approved by the government.
The annual compliances are:
ROC Filings – To be done once every year. Form 8 and Form 11 are the forms to be filed every year.
Income tax returns – To be filed once every year. You need to pay 33% taxes on the profits earned.
TDS returns – To be filed once every 3 months.
GST returns – To be filed once every month.
The benefits of theLimited Liability Partnership company are:
- The compliance cost is less compared to Pvt Ltd and OPC
- You can convert it in Private Limited Company any time
- The LLP can take unsecured loans from any person
The disadvantages are:
- You cannot raise funds in LLP
- Its less credible than Private Limited Company
- Employee do not prefer to work in LLP
The cost to register is Rs 5999. It includes:
- Name approval
- Government fees and professional fees
- LLP agreement
- Registration certificate, Pan and Tan
Proprietorship - All questions answered
Individual founder just experimenting with a Idea or may be a side hustle should register a proprietorship.
Its the simplest structure to register. The minimum requirements are:
- The proprietor should have Pan and Aadhar
- You should have a residential or commercial address proof to register a proprietorship firm.
In order to register a sole proprietorship the documents required are:
- Self attested copy of your PAN (Permanent Account Number) Card
- Self attested copy of your Aadhaar Card/ Voter ID/ Driving License (DL)/ Passport as address proof
- Electricity bill and Rental agreement of premises where you want to setup your business (if it is rented premises)
- Tax paid bill (if it is own premises)
- Bank statement required for GST registration or MSME registration
- Passport size photographs
The steps to register a Sole Proprietorship in India are as follows:
- Apply for the shops and establishment act in your particular state department.
- If all approved you get a Shops and Establishment act license in the proposed name and you can open a bank account and GST in that name.
Sole proprietorship registration –
Application for sole Proprietorship registration in Bangalore – http://164.100.133.176/ekarmika/static/Home.aspx
Application for Sole Proprietorship in Pune – https://mahakamgar.maharashtra.gov.in/lc-registration-of-shops-and-establishments.htm
The annual compliances are:
Income tax returns – To be filed once every year. You need to pay 33% taxes on the profits earned.
TDS returns – To be filed once every 3 months.
GST returns – To be filed once every month.
The benefits of the Sole Proprietorship in India:
- It is the most simplest way to start a business legally in India
- It is the most affordable structure
- Annual compliance fees is the least
- It is the most tax efficient structure
The disadvantages are:
- You cannot raise funds in Proprietor
- It cannot be converted in LLP or Pvt td
- Employees do not prefer to work in Proprietor
The cost to register a Sole Proprietor in Pune is Rs 999 an in Bangalore is Rs 4999. It includes:
- Government fees and professional fees
- Registration certificate