Private Limited Company Registration in India- An Overview

by EzyBiz India Tax & Accounting Consulting Firm

Owning a business is a dream of many for achieving financial freedom and be their own boss. In the recent times, India has become one of the most preferred countries for starting or setting up a business across the globe. The business policies, Foreign Direct Investment (FDI) policies, startup culture and ease of doing business here, are helping people to incorporate their own entities.

More and more entrepreneurs are quitting their lucrative 9 to 5 jobs and opting for company incorporation in India.

There are lots of options for starting business in India like partnership firm, proprietorship, limited companies etc. However, one of the most popular forms of starting business in India is the Private Limited Company Registration.

Private limited company registration provides following benefits or advantages:

1. It is considered as a separate legal entity compared to its shareholders.

2. Shareholders have a limited liability

3. One can easily register under the Startup India Scheme with this business model.

4. It is easy to add and even remove the shareholders and directors.

5. A Private Limited Company enjoys a brand reputation compared to other business models such as Partnership or proprietorship firms.

6. It enjoys a lower taxation benefits compared to partnership firm or Limited Liability Partnership (LLP).

7. To raise money from Angel Investors, Private Equity Funds or VC funds etc., a private company is most suitable.

Requirements of Private Limited Company Registration in India:

To incorporate a private limited company in India, the following essentials are must-

1. Minimum of Two directors are required.

2. It can also have foreign directors as well.

3. Minimum of two shareholders be there in the company. They can be either an individual or a company.

4. A registered office address in the local area serving as place of business is required.

5. Paid-up capital

Process of Private Limited Company Registration in India

Following steps are required to be completed for private limited company registration, namely,

1. Pre-Incorporation Steps: It includes-

a. Application for obtaining the Digital Signature Certificate (DSC) for all the directors.

b. Application for Name approval of the company.

c. Application for Director Identification Number (DIN) for all the directors.

d. Application for PAN (Permanent Account Number) and TAN (Tax Account Number).

e. Application for registration under the Provident Fund (PF) and Employee’s State Insurance (ESI).

f. Preparing the company’s Memorandum of Association (MoA) and Articles of Association (AoA).

g. Obtaining the Incorporation certificate or Private Limited Company Registration in India

2. Post-Incorporation Steps:It includes-

a. A current bank account opening

b. Application for business commencement certificate.

c. Application for Registration under Goods and Services Tax (GST).

d. Appointing the Auditors (Qualified Chartered Accountants) within 30 days of Private Limited Company Registration in India.

e. Organizing the First Board Meeting of the company within 30 days of incorporation.

List of Annual Compliance for private limited company

Post company incorporation in India , every company needs to complete following compliance:

1. Accounting: The private limited company registration in India is required to update its Books of Accounts on a day to day basis.

2. Conducting Audits: Each company is required to conduct Statutory as well as Tax audits in the company for true and fair operations.

3. Financial Statements: The companies are required to prepare its financial statements that include Profit and Loss Account, Cash Flow Statement and Balance Sheets for each financial year.

4. GST Returns: If the turnover of the company is more than Rs. 5 Crore, the company is required to file 24 GST Returns each year (2 in each month). If the turnover is less than that, then 16 GST Returns are to be filed every year (one for each quarter and one for each month).

5. Income Tax Returns: Income Tax Returns are to be filed by the Company annually.

6. ROC Compliance:A Private Limited Company Registration in India is required to hold four Board meetings and an Annual General Meeting (AGM) each year.

7. ROC Returns: The companies are required to file approx.6 returns with ROC every year.

8. TDS Returns: A total of 8 Tax Deducted at Source (TDS) Returns, are to be filed by the Private Limited Company Registration in India.

9. RBI compliance:In case of subsidiary company registration in India, post receipt of share subscription money from parent, Indian subsidiary needs to intimate RBI about such receipt of FDI. Also, Indian subsidiary need to file statement of liabilities and assets in Form FLA with RBI