A Sole Proprietorship is a business entity is wholly owned and controlled by an individual, it is a good form of business for individuals who want to start small but as business grows it necessitate converting it into some greater form for greater advantages. Many opt for choice of Private Limited Company as it give it a status of separate Legal entity also a private limited company offers significant advantages over the sole proprietorship.
In this article we will know about the process of conversation of Sole proprietorship into Private Limited Company, Private Limited Company Advantages.
It’s very important to know the various benefits of registering a private Limited Company, let’s look at some points of differences to make it clearer:
|S.no||Point of Difference||Sole Proprietorship||Private Limited Company|
|1.||Registration||No Formal Registration||A Private Ltd. Company is registered under Companies Act,2013|
|2.||Legal Entity Status||Does not hold any Separate Legal Entity.||Hold separate Legal entity under the Companies Act, 2013|
|3.||Transferability of shares||Non Transferable||Shares can be transferred|
|4.||Liability||Unlimited||Limited to extend of shares|
|5.||Members||Minimum- 1 Member
Maximum – 1 Member
|Minimum- 2 Member
Maximum – 200 Member
|6.||Taxation||Owners income tax||Profits are taxed at 30% plus surcharges and cess as applicable|
|7.||Compliance||Not required||Annual Return, Annual Accounts required to be filed with the Registrar of Companies every year.|
Every First step is Name Reservation for the proposed Company
Name Reservation can be done through “RUN”; it is a simple and easy to use web service for reserving a name for a new company.
Next: Incorporation through SPICE+ form
A Private Limited will be incorporated through SPICE+ form and Agile Pro
SPICE+ form is divided into two parts-
Part – B
These Incorporation services include:
After due verification of the application and documents provided the concerned ROC grant the Certificate of Incorporation (COI), which is the proof of existence of the company, wherein the date of Incorporation, Company Identification Number(CIN) and Permanent Account Number(PAN) is mentioned with the seal of the registrar.
The Company can commence the Business activity once the Certificate of Incorporation is granted, this complete the process of Incorporation of a Company.
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.
Author- CS Aakansha Negi and can be contacted at firstname.lastname@example.org