There are various modes in which you can legally operate your business in India. This includes proprietorship, partnership firm, limited liability partnership firm (LLP) or company. However, if you wish to build a scalable business, then a private limited company is the preferred mode of incorporation. But how to register a company in India? Let’s uncover the benefits of Pvt Ltd company registration and the process of registering the same.
Benefits of Private Limited Company Registration in India
Following are some of the crucial benefits of private limited company registration in India:
- Limited Liability: This is one of the most peculiar benefits of Private Limited company registration in India. The liability of the shareholders is limited up to the amount of share capital invested by them. This is better as compared to the proprietorship and partnership firm where the liability of the owners is unlimited.
- Scope of Expansion: The scope of expansion is quite higher in the case of company registration as compared to other structures of business. You can seamlessly expand the business, open branches of your business and even convert your private limited company into a public limited.
- External Funding: Most investors require you to incorporate a private limited company before they invest in them. Company registration allows you to obtain external funding easily by issuing equity to the investors. Attracting investors can become difficult in the case of other structures like proprietorship or partnership firms.
- Initial Public Offering: Initial Public Offer basically involves issuing shares to the public at large. You need to begin with Pvt Ltd company registration and then convert it to a public limited company to reach the IPO stage. After you launch your IPO, your shares become tradeable on the recognised stock exchange.
- Tax Efficient: You would be happy to know that the tax rate for a private limited company is only 25% as compared to 30% in the case of partnership firms or LLPs. Even in the case of a proprietorship business, the tax rate becomes 30% in case your income exceeds Rs. 10 lakhs (Rs. 15 lakhs under the new scheme). This makes private limited companies tax-efficient as compared to other structures.
How to Register a Company in India?
Here is the step-by-step process to for private limited company registration in India:
- Digital Signature Certificate: Before you incorporate your private limited company, you need to get the Digital Signature Certificate of all the persons who will be acting as the directors and subscribers to the Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
- Filing of SPICE+: You should file the company registration form SPICE+. The form is divided into two parts:
- Part-A: This is the first part that involves furnishing the name and type of the company you are incorporating. You can do the name availability and trademark search. After you fill in Part-A, you are provided with 2 options: either to apply for name reservation or proceed with filing Part-B of the form. Name reservation allows you to reserve the name for 20 days within which you shall file Part-B. The fees for name reservation is Rs. 1000.
- Part-B: This is the second part of Form SPICE+ where you shall furnish all the details of the company, the directors and the shareholders. Further, you need to furnish all the important documents while filing the application.
SPICE+ also allows you to apply for the Director Identification Number (DIN) of the first 3 directors.
- Filing of Other Forms: After you file Form SPICE+, you need to file other forms. This includes AGILE PRO, eMOA and eAOA (in Form INC-34 and INC-34) and INC-9.
- Uploading the Form: Once you complete all the forms, you shall download the same, affix the digital signature of the directors and the professional and upload the form. Pay the relevant fees and your form for company registration will be submitted.
- Query Resolution and Incorporation: After you submit the company registration form, the concerned official will scrutinise the form. In case of any query, you will receive a notice for the resolution of the query and any additional information or documents required. You shall submit the same within the specified duration. In case the registrar is satisfied, your application for company registration will be approved and a certificate of incorporation will be issued.
In a Nutshell
While private limited company comes with more compliances, it certainly carries more benefits as well. From expansion to external funding, private limited companies are getting popular, especially in this era of startups. If you too are building a budding startup or planning to expand your business, contact the ASC Group now for Pvt Ltd company registration!