Online company registration in India is possible with Account Kart. Millions of Indian entrepreneurs including well-known businesses like Flip kart, Phone Pe, and Swiggy favor the most prevalent form of legal structure, the private limited company.
A Private Limited Company is what?
A Private Limited Company is one of the most widely used types of legal entities in India (PLC).Private limited businesses must comply with the 2013 Companies Act, which stipulates that there must be a minimum of two shareholders, two directors, and one of them must be an Indian citizen.
The bare minimums needed to register a company in India are as follows:
Two directors one individual must be an Indian national or resident.
2 Shareholders - Directors are permitted to own stock.
Indian registered office
In India, 100% foreign direct ownership (FDI) is allowed in the majority of industries, and there are no restrictions on foreign ownership of private limited companies' shares. Due to this, most foreign subsidiaries are established in India as private limited companies.
Required Documents for Company Registration
The following identity documents must be provided by the potential directors of a private limited company in order to register the business:
Nationals of India: PAN card requirements
People from abroad: You must have a passport.
A document containing the director's address must also be submitted by the directors in addition to the one mentioned above.
Nationals of India: Passport, driver's license, election identification, ration card, and AADHAR ID
For non-U.S. citizens, a driver's license, a bank statement, and a residence card
Finally, each of the following documents must be shown by the potential Directors as confirmation of residency. The creation of this document must have occurred within the previous two months:
Phone, electricity, and bank statement for Indian nationals
Bank Statement, Utility Bill, and Phone Bill for International Residents
The following paperwork needs to be provided if one of the company's shareholders is a foreign or Indian company:
Resolution of the Board approving Investment in the Company
Incorporation Certificate of the Company
Address proof of the company.
Capital Need to Launch a Company
In India, very little capital is required to launch a business. The shareholders of the business that is incorporating can choose how much capital they want to put in, thus there is no set amount. The concepts listed below should be kept in mind when establishing the capital structure of the business:
Share Face Value: The share face value is the cost per share at which the firm is incorporated. Typically, a share has a face value of 1, 10, 100, 1000, or 10,000 rupees.
Authorized Capital: The total amount of shares a corporation is permitted to issue to shareholders is known as authorised capital. Typically, all firms require either a Rs. 1 lakh or Rs. 10 lakh authorized capital. The corporation would be forced to pay more fees to the Ministry of Corporate Affairs if a greater authorized capital was necessary. After incorporation, a company's authorized capital may be increased at any moment.
Paid-up Capital: Paid-up Capital: The total number of shares issued to shareholders for whom they have made a payment to the firm or deposited monies is known as the paid-up capital of a company. A company's paid-up capital is not permitted to exceed its authorized share capital.
Registration of Entities
To register a company in India, you must first complete the following steps:
Step: 1 RUN Name Approval
For the Ministry of Corporate Affairs to reserve the company name, a request for approval of the company name must first be made. 1 or 2 names with business goals may be included in the name approval application. 1 or 2 more names may be submitted if name permission is denied. In less than five business days, the MCA typically approves all name approval requests.
Step:2 Directors' digital signatures
Wet signatures are not permitted in India according to the Ministry of Corporate Affairs. A digital signature certified by an Indian Certification Authority must be used on every signature for filings with the MCA. As a result, before incorporation, digital signatures from the Directors are mandatory.
Account Kart will get a digital signature for the Directors from a recognized certifying body. The Directors must submit a copy of their identity documentation and successfully finish a video KYC process in order to receive a digital signature. If the Director is a foreign national, the provided passport and other documents must be apostil led by a nearby embassy.
Step 3: Submitting the Application for Incorporation
Following the acquisition of digital signatures, the incorporation application in SPICe Form and all pertinent attachments may be sent to the MCA. The company's articles of association (AOA) and memorandum of association (MOA) are filed with the incorporation application. The MCA issues the incorporation certificate and issues the company's PAN if it determines that the incorporation application is acceptable and comprehensive. The MCA typically accepts all petitions for incorporation in fewer than five business days.
Regulations for Private Limited Companies
Once a company is incorporated in India, it must periodically comply with a number of requirements to stay out of trouble and avoid fines and prosecution. Some of the compliances that a business would need to finish following company registration include the ones listed below:
Within 30 days of incorporation, all Indian firms must appoint an active, duly qualified chartered accountant registered with the ICAI as their auditor.
Director DIN KYC:
All individuals having a Director Identification Number (DIN), which is assigned during the incorporation process, must complete Director DIN KYC each year to verify the phone number and email address listed on file with the Ministry of Corporate Affairs.
Initiation of Business:
Within 180 days of incorporation, the firm must open a current bank account, and the shareholders must deposit the subscription amount outlined in the MOA of the company. So, in order to obtain a start-of-business certificate, the shareholders of a company that will be founded with a paid-up capital of Deposit Rs. 1 lakh into the company's bank account, then provide a copy of the bank statement to the MCA.
MCA Annual Filings:
All Indian-registered businesses are required to provide a copy of their financial statements to the Ministry of Corporate Affairs each fiscal year. The first MCA annual return may be submitted as part of the annual filing for the next fiscal year if a firm is incorporated between January and March. Form MGT-7 and Form AOC-4 make up the MCA yearly return. Both of these forms need to be digitally signed by the Directors and a working expert.
Filing Income Tax Returns:
All firms must file an income tax return using Form ITR-6 each fiscal. No of the date of incorporation, income tax filing must be completed for each fiscal year before the deadline. A digital signature belonging to a director must be used to digitally sign a company's income tax return.
Company's registered office
All businesses with Indian corporate registrations are required to keep a registered office there. The company's name must be displayed on a board at the registered office, which should also be where any notices or communications can be sent. Therefore, a company's registered office cannot be on undeveloped ground or a building that is still under development.
After establishment, a company may, if necessary, alter its registered office. It is simple to finish the process if the registered office is moved within the same city or under the same Registrar of Companies. The procedure would be more time-consuming and difficult if a corporation wanted to move its registered office from one state to another.
GST registration follows the registration of the company
The directors of the firm have the option to choose to incorporate the business and also seek GST registration. A company does not necessarily need to be registered for the GST unless a particular threshold is passed in terms of turnover. Our thorough guide to GST registration in India has more information on the revenue threshold and the procedure for applying for registration.
Account with a Bank for a Private Limited Company
Within 180 days of the company's incorporation, a bank current account must be formed in its name and the subscription money deposited there. If the aforementioned procedures are not followed, a penalty may be imposed and the commencement of business certificate will not be provided.
A private limited corporation must have the following documents in order to create a bank account:
Board resolution authorizing the directors to create a bank account, the incorporation certificate of the company, and KYC documents attesting to the company's address
Account Kart collaborates with a number of banks to provide seamless current account opening for our clients' businesses.
Benefits of Private Limited Companies
The following are the primary benefits of setting up a private limited company in India as opposed to other entity kinds.
Different Legal Entity
Both a legal entity and a juristic person, a firm. As a result, a business enjoys a wide range of legal rights, including the ability to purchase land, take on debt, employ people, and more. Because a corporation is a distinct legal entity, its owners (shareholders or directors) are not personally responsible for its debts.
An independent legal entity with stringent liability limitations is a private limited company. Because of this, the shareholders are only liable for the share capital they first invested in the business and not for any subsequent losses.
The ability of a firm to continue operating perpetually without being formally dissolved is referred to as perpetual succession. Due to its status as a distinct legal entity that is unaffected by the passing away or other departure of any of its members, a business can continue to operate even if its membership changes.
A private limited company offers a range of funding options. A business can raise money from investors, shareholders, angel investors, venture capitalists, private equity funds, foreign funds, non-bank financial companies (NBFCs), banks, and other financial organizations. Investors can only supply debt and equity funds to a corporation.
Cons of a Private Limited Company
Even if forming a company has many benefits, not all business owners should do it for the following reasons:
Regardless of the volume of business or the nature of the activity, a corporation is required to maintain a number of compliances. As a result, running a business every year includes a minimal recurring expense.
Documents Required For Private Limited Company
PAN Card - PAN is mandatory for Indian Directors.
PASSPORT( FOREIGN NATIONAL ONLY) - Foreign shareholders or directors must have a passport.
AADHAAR CARD - Aadhaar is mandatory for Indian Directors.
FOREIGN GOVERNMENT- ADDRESS PROOF - Any document issued by a Foreign Government having photo and address of the directors and shareholders.
BANK STATEMENT - The directors' and shareholders' most recent bank statement
LATEST ELECTRICITY BILL - The registered office's premises, the most recent electricity bill.
LATEST TELEPHONE BILL - Latest telephone bill for the registered office premises .Electricity bill preferred
BOARD RESOLUTION AUTHORISING INVESTMENT - If the Proposed shareholders is another company
INVESTING COMPANY ADDRESS PROOF - If the proposed shareholders is another company or legal entity
PASSPORT SIZE PHOTO - Passport-size photos of the directors and shareholders are also provided.
RECENT UTILITY BILL - Business Place
After the end of each financial year, every registered entity must fulfil all of its compliance requirements. It primarily consists of filing annual papers with the MCA, auditing financial records, and filing tax returns.
FORM - COB FILING
COMPANY COMPLAINCE - Commencement Of Business Certificate
DUE DATE - To be filed before 180 days of Company Incorporation
PENALTY - Rs. 50,000 for Non-Compliance
FORM - DIR 3 EKYC
COMPANY COMPLAINCE - For every person with DIN
DUE DATE - Before 30th September every year
PENALTY - Rs.5000 penalty if the DIN is deactivated
FORM - FORM ADT 1
COMPANY COMPLAINCE - Appointment of Auditor
DUE DATE - Within 30days of company incorporation
PENALTY - Rs.300 per month
FORM - FORM AOC 4
COMPANY COMPLAINCE - Filing Financial Statements of the company
DUE DATE - 30 days from the conclusion of the AGM
PENALTY - Rs.100 per month
FORM - FORM MGT 7
COMPANY COMPLAINCE - Annual Returns of the company
DUE DATE - 60 days from the conclusion of the AGM
PENALTY - Rs.100 per month
Depending on the kind of entity and business activity, other compliance filings may be necessary in addition to those listed above. Please consult an Account Kart Advisor about how they can assist you with your company's compliance.
Private Limited Company FAQs
1. What do authorized and paid-up capital mean?
The maximum amount of stock that a corporation is permitted to issue is known as authorized capital. In contrast, paid up capital refers to the number of shares that the company has issued to shareholders. After incorporation, authorized capital may be increased if more shares are to be issued to shareholders.
2. Why would you want limited liability protection?
A firm that has limited liability is only held liable for a small portion of its debts. The shareholders' liability with regard to the obligations of the company is constrained, unlike in sole proprietorships and partnerships.
3. I need to start a current account.
A current account must be opened in the company's name after incorporation in order to conduct transactions. Your advisor will help you choose the bank you wish to open an account with and obtain the necessary paperwork, including a copy of the board resolution, the memorandum and articles of association, the incorporation certificate, the PAN allotment letter, and a utility bill.
4. Can foreign nationals, NRIs, or foreign organizations register a company in India?
In accordance with the RBI's rules for foreign direct investment, yes, NRIs, foreigners, and foreign corporations may form businesses and make investments in India. However, according to Indian incorporation laws, the company's Board of Directors must include at least one Indian citizen.
5. How can I determine which names are available for my business?
You can look for available names in India by using the Account Kart company name availability search tab. It is crucial to remember that Account Kart would only offer options based on identical names already registered.
6. Is GST registration currently required?
For some firms, filing for GST is required. Companies engaged in interstate business, including e-commerce activities, and businesses with annual revenue above Rs. 40 lakhs are required to obtain the relevant licenses. GST registration takes just 3-5 working days with Account Kart.
7. What regulations must a private limited company follow?
Once a business is incorporated, it must continue to comply with specific regulations. Within 30 days, an auditor must be appointed, and yearly returns and income taxes must be filed each year. In addition to this, there are other requirements that must be met, such as completing "Commencement of Business" paperwork and DIN e KYC.
8. The statutory auditor will be chosen at a later date.
Within 30 days after incorporating a private limited company, the Board of Directors must appoint a chartered accountant who is currently in practice.
9. Which Form Must Be Filed For A Private Limited Company's ITR Filing?
The ITR returns must be submitted annually on Form ITR 6 by Private Limited Companies with Indian registrations.
10. Which form should be used to file a company's yearly returns?
AOC 4 and MGT 7 are informed that each year, corporations with Indian registrations must submit the MCA annual return.
11. How many people must join to form a Private Limited Company?
A Private Limited Company must have a minimum of 2 members and a maximum of 200 members to be incorporated.
12. How are rights of ownership transferred?
Shares can be used to transfer ownership of a Private Limited Company.
13. How are the Corporations taxed? How much do taxes cost?
Private Limited Companies are subject to a 30% tax rate plus any relevant surcharges and cess.
14. A private limited company is governed and controlled by whom?
A Private Limited Company's operations are governed by the MCA and Companies Act, 2013.
15. What advantages do Private Limited Company registrations offer?
There are several benefits to forming a private limited company, including limited liability, access to capital, borrowing power, increased capacity, simple exit, and range of numerous prospects.
CA Muthu who is Qualified Chartered Accountant is the founder of the company. He has designed this digital CA firm to overcome the major issues faced by client from traditional CA firms. His vision is to provide clients with Quality Services and Quality Consultations.