private limited company

What does it take to start and operate a private limited company in India?

Many entrepreneurs and founders stay reluctant to incorporate the private limited company as they believe it would be a costly affair after starting it. But with the inception of the company registration process on the online platform, the situation has been changing dramatically.

Founders and entrepreneurs always remain skeptical about initiating their business by opting to register a private limited company in India as a business structure since it involves high costs. It was said to be true five years ago, but now given the transparent pricing the internet has brought about, many newer businesses can initiate the private limited company earlier than before.

Indian company registration.

The private limited company registration cost relies on many factors in India. First, the authorized share capital used to be a vital factor. One can possibly register a company with it. Nowadays, there is no such requirement for the minimum share capital to start the business. The registration cost has also mainly plummeted since the government waived off the government fee for the company registration from the 26th of January, 2019.

The private limited company registration process is now available on online platforms. This makes it straightforward that incorporation can be done in little or no time with nominal charges.

Now, let’s look into the costs associated with starting and operating a private limited company in India.

Starting the business.

The company registration cost has reduced in India, as has the complicated process with the new INC-32 process. Nowadays, it takes around Rs.7000 as government fees if you register with the minimal prescribed capital of Rs. one lac (as start-ups normally begin with), but you would also require legal assistance from a lawyer or CA. Their charges rely on the level of experience and expertise. This is if you get it done offline. Nonetheless, you can also do it online, where the incorporation fee is low, starting at around Rs. 7000. This is all it would cost to incorporate, now that there is no such requirement of minimum paid-up capital.

COST – the one-time cost of around Rs. 14000 for sanctioned capital of Rs. one lac.

Business registration.

This is not the necessity for the private limited company, so to speak, but all businesses in India. Every one of them needs some government registrations, based on the offering. If you provide the service, then you should charge customers service tax (for which a service tax registration is compulsory) once your turnover goes beyond Rs. 9 lacs. Those selling goods should get VAT registration. You also require a license under the shops and establishment act to open a current account in the bank, professional tax if you have employees and much else.

COST – it would be around Rs. 6000 to Rs. 30000 on each registration, although most of these are state-based taxes and can differ from one state to another.

Step-by-step guidelines and required documents for company registration.

Significant steps involved in the process of private limited company registration are given below;

– DSC (digital signature certificate) application.

– DIN (director identification number) application.

– Application to follow the steps for name availability of a Pvt. Ltd. Co.

– Submitting EAoA and EMEA for registering the private company.

– Applying for TAN and PAN of the company.

List of required documents for registering a private limited company.

– PAN card copies of the administrator.

– Administrator’s passport-sized photocopies.

– Aadhar card copies of the administrator.

– Rent agreement copy (if it is a rental property).

– Property papers copy.

– Electricity/Water bills of business place.

One who intends to initiate the private limited company can apply for the company’s name, company incorporation, DIN of directors, TAN and PAN of the company, all at once via an integrated E-form SPICe. The whole process to start a business in India has been made easier and quicker. It was possible by the updated reforms initiated by the ministry of corporate affairs (MCA).

Compulsory compliances.

Every company should make a declaration to MCA from the beginning to inform the recruitment of an auditor, annuals fillings of directors, board meetings’ minutes, and so forth. It does not involve individual efforts and time.

COST – online legal companies would do this for around R. 15000 (including government fees) but can be done with local CS.

Auditing and accounting.

Every company has to do this. Relying on how many entries there will be, charges would differ but expect to pay at least Rs. 2500 a month. Auditing is not compulsory for partnership and proprietorship, but it is for private limited companies. Annually it would cost around Rs. 15000.

COST – minimal of Rs. 2500 a month for accounting and at least Rs. 15000 for auditing.

Other compliances.

MCA tracks the several aspects of business; when you make changes in them, you are obliged to inform MCA. Such as replacing directors, moving of office, and so forth. The cost will be there as well; you might be hiring a CS on a per-job basis.

COST – professional fees of Rs. 1500, relying on the complexity of the job.

Event-based compliance.  

Such compliance is needed when there is a change in the registered office, directors, and so forth. Such events are being tracked carefully, and if compliances are not fulfilled, then one has to pay the penalties.   

COST – professional fees of Rs. 2000, relying on changes and complexity of the process.

Once you complete all the processes mentioned above, your registration certificate would be allocated within two weeks.

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