How to Turn Your Business Idea into a Private Limited Company in India

Starting a business is a great step in your entrepreneurial journey, and turning it into a successful venture takes long-term stability and planning. In India, creating your own business has become simpler after the Government of India initiated the Make in India program. Every small idea has the potential to turn into a great business if you are sure about your idea and you know you have to promote it.

What is a private limited company?

A private limited company is the most popular business structure in India. It has a separate identity and liability, which gives it the opportunity to attract investors on its own. As per the Companies Act 2013, private limited companies have been given legal entity status under the Ministry of Corporate Affairs. This means it cannot call on the public to purchase its shares or securities; it should have at least 200 members, and the minimum capital requirement of the company should be 1 lakh.

What is private limited company registration?

Private limited company registration is a legal process that incorporates a company under the Companies Act 2013. It offers a certificate of incorporation establishing the fact that it is now a separate legal entity. In the future, if the ownership of the company changes, the company remains a venture.

Through this registration, the company has two shareholders and two directors, and at least one should be of Indian origin for it to comply with the Companies Act rules. It establishes that the company must have up to 200 members and is suitable for startups, technology, consulting, and business planning companies, helping them to expand their business.

Through this registration process, the businesses can provide legal proof of existence and then apply for loans or government tenders. It even shapes the professional image of the business. It provides flexibility for the business to expand its venture and establish its business.

Benefits of applying for a private limited company

Before you apply for private Limited company registration, you need to understand why it is important for your business. The registration process has several advantages that help the business owners in their entrepreneurship journey.

• Through this registration process, the shareholders are liable for the company’s shares, and they can protect their personal assets in case of company debts.
• It establishes a separate identity for the business, and it can have property and a bank account under the registered company name.
• The registered company works as an individual, which develops the trust of customers, suppliers, investors, and lenders.
• Private limited companies can raise investment and participate in fundraising events. It gives them flexibility to issue their shares for funding.
• The company can stand for the long term regardless of its owner and management.
• The private limited company benefits from various tax deductions under the Startup India scheme.
• Through this registration process, it becomes easy for the owners to transfer the shares without affecting the company’s operations.

Documents required for registration

Documentation is an important step towards completing the registration process. The documents should be carefully submitted and should align with the government rules.

Shareholders

If you are registering as a shareholder or a director, you need to submit the following documents:

• Email ID
• Mobile number
• Passport-size photograph
• PAN card
• Aadhaar Card or other government ID as directed.
• Address proof, such as a bank statement or electricity bill.

Office registration

For registering your office, you need to submit the following documents:

• Rent agreement in case the property is rented, along with an NOC from the owner.
• If not, you need to submit the land agreement paper with the NOC document.
• Electricity or water bill not older than 2 months

How to apply for private limited registration

The application process for private Limited registration is easy and can be submitted through the MCA portal. You can follow the steps below or if you need help or are confused about the procedure to fill the application form, you can contact professionals like the one at Lawfinity to get it done.

• Step 1: First, you need to obtain a digital signature from the authority.
• Step 2: Choose a suitable name for the company as per MCA rules.
• Step 3: Prepare the required documents as proposed by the authority.
• Step 4: Submit the SPICe+ incorporation form and fill in all the information correctly.
• Step 5: Pay the application fee as prescribed by the government. Remember that the cost depends on share capital and the state policy.
• Step 6: After the above process has been completed, the registrar will review the application and issue a certificate of incorporation, which establishes the legal identity of the company.

Timeline

The whole documentation process and approval may take around 10 working days. As, through this online process most of the worst has become easy and is done in fast paced.

Cost of registration process

The total cost to apply for private limited company registration depends upon government charges, state policy, stamp duty, digital signature, and professional fees.

Conclusion

In India, establishing a private or a public limited company has become quite easy. You just have to complete the registration process and fill in every detail correctly. Once everything is prepared, it just takes 1 – 2 weeks for the company to get registered as a private limited company. Once the registration process is completed the authority will verify whether the company meets all the requirements as per the government rules then only they can be registered as a private limited company.

As per the government rules, all you need is a unique name, valid address proof, two directors or shareholders, and approximately 200 members for registration. Every company wants to be established as a private limited company because it gives authority to participate in investment drives and seek government support at any given time.

If the company is registered as a private limited company in India, and if at any point in time the original owners of the company want to step down, they have the full authority to do that and step out with the shares.

FAQs

Ques. Who should apply for a private limited company registration?
Ans. To apply for a private limited company in India, you need to build a business that must align with the rules of the government, and if you are going to protect personal assets and seek external investment, then it is a suitable choice to register as a private limited company.

Ques. What is the capital required for private limited company registration?
Ans. There is no minimum capital required to register as a private limited company. Even if you are a starter and have just built an idea for your business, you can register as a private limited company to grow and expand your business.

Ques. What are the annual compliances for private Limited companies?
Ans. The compliance for registering as a private limited company is that the company needs to have a bank account, share certificate, must hold meetings at least annually, must have proper accounts and audit details, and should have a GST registration and other licences as per the guidelines.

Ques. What is the total cost for registering as a private limited company in India?
Ans. There are various factors that affect the total cost of the registration. The total cost may come to around INR 12000 to INR 30000 depending on the factors you have opted for.