‘Why register your company as a private limited firm?’ This is a common question, and there are many answers to it. We asked one of the biggest Corporate Service Providers in India, 3E Accounting India to understand what a private limited company is, and what are its benefits.
What is a Private Limited Company?
A private limited company stands as a separate legal entity. This means that the company isn’t the ‘ownership’ of someone, but the firm has shares bought by shareholders. Additionally, the firm stands as a corporate entity, meaning that there are CEO, executives, branches, employees, etc.
An Indian Private Limited Company needs at least two directors at the time of registration. Additionally, there have to be at least two shareholders, and the maximum number of shareholders in an Indian Private Limited Company is 200. Furthermore, if your company grows a lot, you can turn it to a public limited firm, making the share available to the public.
The incorporation of a private limited company can be a little more confusing and time-consuming than other types of firms in India. Furthermore, you have to be clear of the private limited company registration charges so that you don’t pay more than needed. You can take help from a CSP to register a company in India.
How Much Does it Cost to Register a Private Limited Company in India?
The registration process itself in India is very cheap given that the Certificate of Incorporation costs only Rs. 100 per copy. If you want to convert your existing firm into an LLP, you will have to pay Rs.50. Any other public document of your firm requires you to pay Rs.25 per page. The cost of an LLP document is Rs. 5 per page.
The authorized capital for a company in India is Rs. 1 lakhs. By the way, 1 USD is equal to around 70 INR.
If you are a foreigner, most of the money you need to pay is for the incorporation service provider. However, just like anything in India, incorporation services are also very affordable, and their charges depend on the type of the company and the licenses you need to take. For the best results, you can work with an incorporation provider which is primarily based on India, or one which has an Indian Branch.
What are the Benefits of a Private Limited Company?
Like said before, a private limited company is a corporate entity with shares and not someone’s ownership. This ensures that important business decisions are taken by a collective approach rather than by a single person, so there are more options for growth. Additionally, the company will continue to operate even if a shareholder dies or is unable to continue.
In a private limited company, personal funds are protected from the funds of the company. If the company goes down, the shareholders don’t have to use their personal money to bring it back to business. They will only be liable for the losses depending on the amount they invest.
For more information, you can refer to the resources of an India Company Incorporation Services provider.