Overview: What is Private Limited Company?

• A Private Limited Company is a privately held small business existence, which is highly recommended way to start and run a business. Most startup companies are incorporating as private limited company for enjoying the benefit of a Startup India Scheme. While, minimum 2 shareholders are required to start a private company, the higher limit of members are 200.

• For company registration, there must be a least of 2 directors while maximum 15 directors can be appointed in a company. Proposed director must have attained age of 18 years.

• For company registration, there must be a least of 2 directors while maximum 15 directors can be appointed in a company. Proposed director must have attained age of 18 years.

• If a private limited company faces financial risk, its shareholders are not subject to sell their personal assets, i.e. they ought to have limited liability.

• For company registration, there must be a least of 2 directors while maximum 15 directors can be appointed in a company. Proposed director must have attained age of 18 years.If a private limited company faces financial risk, its shareholders are not subject to sell their personal assets, i.e. they ought to have limited liability.

• There is no minimum paid-up capital required for a private limited company registration. Every private limited company must use "private limited" after their name.

• A private limited company has continuous existence. A private limited company holds on existing even in the case of death or bankruptcy of its Members.

• A private limited company does not have any relationship with the public; they aren't permitted to ask for any collateral from the public or public sectors. In a private limited company, people are not entitled to transfer shares, which protect takeovers of private limited companies from big enterprises.

 Benefits - Why one should go for Private Limited Company Registration?

• Tax Benefit:

• If private limited company have turnover of Upto 400 Crores, then will be taxed @25% whereas highest tax slab for individual/Partnership/LLP is 30%.

• Benefit of Start-up India Scheme

• The Private Limited Company is eligible to take benefit of registration under Startup India Scheme. This scheme has various benefits including tax exemptions for the recognized startups.

• Limited Liability

• The responsibility of the members of a private limited company is restricted to their share only as the private limited company is a separate legal entity.

• Separate Legal Entity

• A private limited company is a separate legal entity which posses all the rights to sue or to be sued. It acts an artificial person which can buy a property on its own name.

• Credit Availability

• A private limited company can obtain funds from the debentures as well as the stockholders. Registered Private limited company is considered as a corporate entity that attracts various angel investors and venture capitalists that helps them to expand and raise their funds for the growth of their business.

• Perform Internationally

• The private limited companies supports Foreign Direct Investment in which other type of firms requires appropriate licensing and approval from the administration for foreign investments.

• Perpetual Existence

• A private limited company has a lifelong existence. Private limited companies are considered as separate legal entities and are separate from the existence of their owners. It means they cannot be dissolved or end because of the death, retirement or insanity of any of their member/ director/ shareholder.

• Enhanced Value In Market

• A registered private limited company is considered more trustworthy as compared to the non-registered ones. Information regarding the registration of private limited company can easily be obtained from the website of Ministry of Corporate Affairs. Vendors, suppliers and investors trust them over the other business structures. As a result, it enhances the brand value of the company amongst the customers and other investors and suppliers.

• Ease In Transfer Of Ownership

• It is quite easy to transfer equity to new members and issue fresh shares in private company.

 Requirements: What are the basic requirements of Private Limited Company Registration in India?

• Two Directors

• A private limited company must have at least two directors, with a maximum of fifteen. A minimum of one of the company's directors must be a resident of India.

• Two Shareholders

• A private limited company must have at least two Shareholder, with a maximum of Two Hundred.

• Digital Signature

• All directors & Shareholders should have digital signature certificate which will be used to register a private limited company.

• Unique Name

• The name of your business must be unique. The suggested name should not match with any existing companies or trademarks in India.

• Minimum Capital Contribution

• There is no minimum capital amount for a company.

• Registered Office

• The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NOC is obtained from the landlord.

 COMPARATIVE VIEW OF VARIOUS BUSINESS STRUCTURES

Sl No.	Particulars	Proprietorship	Partnership	LLP	Private Limited Company
1	Minimum Members Required	1 Person	Minimum 2 Partners	Minimum 2 Partners	Minimum 2 Directors & Shareholder
2	Maximum Members Required	1 Person	Maximum 20 Partners	No Upper Limit	Shareholders: 200 & Directors: 15
3	Minimum Capital	NA	NA	NA	NA
4	Cost of Incorporation (Inclusive of All Charges)	NIL	Rs. 3,000 - 4,000	Rs. 7,000 - 12,000 (Based on Capital)	Rs. 10,000- 20,000 (Based on Capital)
5	Registration Required	NA	Can be Registered with ROF	Registered with MCA	Registered with MCA
6	Separate Legal Identity / Different PAN Card	No	PAN is issued for Firm but Not a Legal Entity.	Yes	Yes
7	Liability	Unlimited	Unlimited	Liability	Liability
8	Time in Incorporation	NA	3-4 Days	7-10 Days	7-10 Days
9	Audit	If Turnover exceed specified limit	If Turnover exceed specified limit	If Turnover/Capital exceed specified limit	Compulsory
10	Maintenance of Books	Based on Turnover (Income Tax)	Based on Turnover (Income Tax)	Compulsory	Compulsory
11	Annual Additional Cost (Comparative)	NIL	NIL	Rs. 5,000 - 7,000	Rs. 10,000- 15,000
12	Income Tax*	Tax as per Slab Rate	31.20%	31.20%	Manufacturing: 17.16%(New Plant & Machinery) Others: 25.168%
13	Deduction allowed From Income	NA	Partners Remuneration (Limit Prescribe in Income Tax)	Partners Remuneration (Limit Prescribe in Income Tax	Directors Remuneration (No Upper Cap but Should be Genuine)
14	Value in Terms of Branding	Low	Low	Moderate (But Not Recognized)	High
15	Startup India Recognition	NA	NA	Yes	Yes
16	Exit Route Compliance	Low	Low	Moderate	High
17	Can Purchase Property?	In the name of Proprietor	No	Yes	Yes
18	Beneficial for	1. Small Business Owners 2. Going with new Venture, Result / Performance of Product is not known 3. Business Having Annual Income upto Rs. 15 Lakhs	1. Advisable if 2 or more partners are actually involved & want to register the Partnership < 2. Short term Startup 3. the Income from the startup in not more than 5-8 Lakhs p.a.	ame as partnership, Additional Benefits: 1. Startup India 2. Builders (Since Property can be purchased) 3. Startup which in future wants to move to Private Limited 4. Branding (Not Much beneficial)	Most Advisable 1. Manufacturing Concern 2. Big Business (Having Annual Income greater than 15 Lakhs) 3. Startup who wants to avail Government Benefits/ Funding 4. Branding 5. Government Contracts 6. Businesses moving towards Global Market 7. Tax Planning (Big Players) 8. Business expanding through Franchise Model.