Private Limited Company Registration
Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. To register a private limited company, a minimum of two shareholders and two directors are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.Unique features of a private limited company like limited liability protection to shareholders, ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed.
Benefits of Private Limited Company Registration
Easy To Establish
It is relatively easy to establish and register the sole proprietorship business. There is no specific process to be followed to setup this business. Also the cost of sole proprietorship registration is very less compared to any other business structure. The business runs on the identity of the proprietor himself. He can run any legal business in his own name or with a different legal name as brand.
Tax Benefits
Proprietorship business is not treated separately in for income tax purpose. The tax slab as specified for an individual's income is only applicable to the income of the business. The rates of tax are lower compared to other business structure like company and partnership. The benefit of deductions is an added advantage with combined ITR for individual and the business
| Private Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Proprietorship Firm | |
|---|---|---|---|---|---|
| Act | Companies Act, 2013 | Companies Act, 2013 | Limited Liability Partnership Act, 2008 | Indian Partnership Act, 1932 | No specified Act |
| Registration Requirement | Mandatory | Mandatory | Mandatory | Optional | no |
| Number of members | 2 – 200 | Only 1 | 2 – Unlimited | 2 – 50 | Only 1 |
| Separate Legal Entity | Yes | Yes | Yes | No | No |
| Liability Protection | Limited | Limited | Limited | Unlimited | Unlimited |
| Statutory Audit | Mandatory | Mandatory | Dependent | Not Mandatory | Not Mandatory |
| Ownership Transferability | Restricted | No | Yes | No | No |
| Uninterrupted Existence | Yes | Yes | Yes | No | No |
| Foreign Participation | Allowed | Not Allowed | Allowed | Not Allowed | Not Allowed |
| Tax Rates | Moderate | Moderate | High | High | Low |
| Statutory Compliances | High | Moderate | Moderate | Less | Less |