Dear friends, in this competitive business environment starting a new business as single entrepreneur is not a good idea. Because in case of proprietorship business, liability of business owner is unlimited and they also struggle in raising funds and to get better human resources. Now a days, youngsters are preferring to join a corporate entity instead of joining a proprietorship business. And many persons are also planning to start new business but they are not able to decide which business constitution is better in long run. In this blog, we will discuss about the FAQ’s related to Incorporation of Private Limited Company which are generally asked by new entrepreneurs.
Which business constitution is better out of Proprietorship/ Partnership/ Private Limited company?
Dear friends, each type of business has their own Positive and negative factors. Like in case of Proprietorship and Partnership business, liability of owner/ Partners is unlimited but in case of Private Limited company liability of shareholders is limited to there share capital. Further, Private limited company has a separate legal entity.
Can a single person incorporate a Private Limited company?
Minimum 2 persons are required to incorporate a private limited company. However, you can incorporate an OPC (One Person company), which is recognised and registered with MCA.
What are the documents required to Incorporate a Private Limited Company?
√ Firstly, we have to get name approval from MCA
√ Requires KYC Documents of Directors and Shareholders (PAN Card, Aadhar Card, Voter Id, Passport, Bank Statement)
√ Photo of Director and Shareholders
√ Digital Signature of Director and Shareholders
√ Rent Agreement/ Lease deed/ Electricity bill of the business premises of Proposed company
√ Signed declarations from Shareholders etc
Whether annual compliances are same in OPC and Private Limited company?
In case of OPC (One Person company) compliances are very less in comparison to Private Limited Company.
I am already running a proprietorship business in the name of M/s Indian Enterprises. Is it possible to incorporate Private limited company with same name?
In case of Private Limited company, first of all we have to take name approval from MCA. If it is not approved then incorporation of Private limited company with such name is not possible.
What type of compliances a Private Limited company has to do during the year?
There are many compliances which a private limited company has to do, out of which some are as follows:
√ Conduct of Board Meeting at regular interval
√ Conduct of AGM/EGM
√ Preparation of Minutes
√ Maintenance of Books of accounts as per accounting and auditing standards
√ Filing of annual reports with MCA (AOC-4, MGT-7/7A Etc)
√ Director KYC
√ Income Tax Return Filing
√ GST Return Filing
Above, some compliances are given but there are many others compliances a company has to do. From time to time some old compliances are removed and new compliances are introduced. For that, we have to update our self on regular basis because in case of default we have to pay heavy late fees.
Few Years back, I have incorporated a Private Limited company with my friend, however no MCA compliances are done for this company and No director KYC is done. Whether I can become director in new company?
If you have not done Director KYC then MCA deactivates your DIN Number. Further, non compliance by old company impacts your profile. So, your appointment without correction of old non compliances is not possible.
If I incorporate a Private Limited company, whether any support (Like Subsidy/ rebate) is given by Government to start my business?
No such kind of facility is provided. However, if you register your Private Limited company under Udyam Aadhar and Startup India (If eligible) then some extra benefits are available in form of lower Income Tax rate etc, which are generally not available to other companies.
Whether Statutory audit is mandatory in case of Private Limited company?
Yes, as per Companies Act, 2013, it is mandatory for a Private Limited company to get its books of accounts to be audited by a Chartered Accountant (CA) on annual basis. After audit you have to submit your financial statements on annual basis to MCA. In case of default, you have to pay late fee.
The Author “CA. Shiv Kumar Sharma” can be reached at mail –email@example.com and Mobile/Whatsapp – 9911303737/ 9716118384