Business & Finance

Benefits of Registering Your Company as a Private Limited Company

A private limited company is a privately maintained small business. The registration of such companies is governed by the Companies Act 2013. In case the company faces a financial risk then it should have a limited liability. A private limited company has a never-ending existence even in the case of death or the bankruptcy of its members.

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If you are starting a company in India then you can register it as a private limited company. This will give your company a legal presence and your business will become a recognized entity. The company has to be registered with the Ministry of Corporate Affairs in India.

Your company gets many benefits when it is registered. It helps to protect the reputation of your company as a respectable business. It helps to increase the trust of the employees, suppliers and consumers. You may get opportunities to do business with big companies. A private limited company can be considered to be a separate entity having its own rights and obligations. Its identity is distinct from that of its members.

To get a private limited registration there are a few requirements to be fulfilled. The requirements for a Pvt. Ltd. registration are as follows:

  • The company must have at least two directors who should be at least 18 years of age. One of the directors must be an Indian resident. The maximum number of directors allowed is 15. A foreign national can also become a director of the company.
  • The company should have at least two shareholders who can be individuals or corporations. The maximum number of shareholders that a company can have is 200. The director and the shareholder can be the same.
  • The suggested authorized share capital is INR 20,000.
  • You will need a Digital Signature Certificate for 2 promoters and 1 witness. A Digital signature is required to protect the security and the authenticity of electronic documents.
  • The DIN stands for the Director Identification Number and is required for all directors.

The registration process is available online which you can do on your own. You can scan all the documents and forms and complete the process online. You do not have to be physically present. There are service providers who offer company registration in India online. You just have to fill out their online form and their experts will get in touch with you to complete the registration process. They can help you get your company incorporated.

Benefits of a Pvt. Ltd. company registration

Benefits of Registering Your Company as a Private Limited Company

There are many benefits of a private limited company registration. They are as follows:

  • The main benefit is that if the company cannot pay its loans then only the investment in the business is lost. The personal assets of the director will stay safe. The members are only liable for unpaid shares held by them.
  • The private limited company is a known business structure. Most vendors, companies and corporate customers prefer to work with a private limited company.
  • A private limited company gets better options to raise funds. It can raise funds through bank loans, investors and capitalists when compared to others. It can raise investments and loans from NRLs and foreigners.
  • A private limited company is the preferred choice of investors because it is easy to exit from it. Such a company is well structured and has fewer strings attached.
  • A private limited company has a known structure and it is easy to hire employees and motivate them with corporate designations and stock options.
  • A private limited company is easy to sell as it requires very little documentation and cost.

There are also other benefits when you register for a private limited company. A private limited company requires fewer legal formalities when compared to a Public Limited company. It gets exemptions and privileges under the company law and less compliance is required. It is not required for the company to publish its accounts or file any documents.  The company can win the trust of the general public due to its enhanced transparency.  In case of a death or a transfer of shares, the continuance of a private limited company will not be affected.

If all the documents are ready then you can get your company incorporated within 15 days.

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