A private limited company is a privately held business organization held by private partners. The liability plan in these is that of a limited partnership, wherein the obligation of an investor extends out simply up to the number of shares held by them. This sort of business entity limits proprietor obligation any securities of the company, the number of shareholders to 200, and confines investors from openly exchanging shares. To register a private limited organization, at least two investors and two directors are required.
In this article, Phoenix tax consultant in Chennai will talk about the entire process of registering a Private Limited Company in Tambaram, Chennai, the step-by-step process, and the compliance measures one at a time.
Attributes of a Private limited company
- Membership: Like any other company, at least two shareholders are needed to begin with. However as per the companies ACT 2013 such a company can have a maximum of 200 members.
- Limited liability: In private limited company liability of each member or shareholder is limited. It means in case the company faces a loss the member or shareholder is not liable to sell their personal asset. Therefore the personal or individual asset of a member or shareholder is not at risk.
- Separate Legal entity: The companies identity is kept distinct from its members or shareholders. Therefore it is clear that the assets and liabilities of the company are distinct from that of its proprietors.
- Perpetual Succession: A Private limited company continues in perpetual succession which means In case of death, insolvency, or bankruptcy of the business, the company continues to exist. Thus it is clearly understood the life of the company stays perpetual and is not affected by the lives of the members or shareholders.
- Risk Factor: In a private limited company, the risk of losses is borne by every member or shareholder of the company. This is not normal for the instance of sole ownership and organization where one or few people bear the losses individually. Accordingly, if a company faces loss, every shareholder adds to such a loss to the degree of their share in the organization’s capital. In this way, the risk factor of losses subsequently gets divided over an enormous number of shareholders.
Documents required for Private limited company registration:
For a hassle-free Private limited company registration process, Phoenix tax consultant in Chennai ask the directors to submit the following documents
- Copy of PAN Card and passport of directors
- Passport size photograph of directors
- Copy of Aadhaar Card/ Voter identity card of directors
- Copy of Rent agreement (If rented property)
- Electricity/ Water bill (Business Place) or bank statement
- Copy of Property papers(If owned property)
- Landlord NOC (Format will be provided)
Registration process for Private Limited Company
Don’t know how to register your company as a private limited company? The process of registering your company as a private limited company is a tedious process as it involves many compliances. But don’t be stress as our expert Phoenix tax consultant in Chennai is here to help you and guide you throughout the registration process.
- Obtain Digital signature certificate
A digital signature is mandatory to file the forms required for company formation. The registration process is generally done online and it requires a digital signature certificate in order to get the registration process done. The digital signature certificate should be obtained from the government-certified agencies and is mandatory for all subscribers, and witnesses in the memorandum. You can get your DSC online in just two days or from any certified agency. The member has to obtain either class-2 or class-3 DSC. In the class-2 category of the individual is confirmed against a pre-verified database. Whereas In class-3 the individual needs to introduce himself before registering authority to prove his identity. This way you can easily obtain your digital signature certificate.
- Apply for Director identification number (DIN)
DIN is an identification number given to the person who wants to be the director of any organization. Only 1 DIN is enough for one individual to be a director of any number of companies. The DIN can be obtained in the following ways.
- Form DIN-3 needs to be filed where the basic information of the director is asked along with it you will have to submit, PAN card, Adhaar card, address proof, etc.
- A maximum of 3 directors can apply for DIN by filing SPICe. Under this process, if the company has a maximum of 3 directors with no DIN then filing SPICe is the best process to obtain 3 DIN for each director
- Lastly, you can ask our expert tax consultant to help you out with the process.
For name approval, you need to submit an application to the concerned registrar of companies along with the required documents and fees. You can apply for 6 company names among which only one name will be chosen by the ROC. In case if all the names are rejected by the registrar you have two chances to apply for the name again with the same fees incurred.
MOA & AOA
Once the name for your Private limited company is approved then the drafting of Memorandum of Association and Article of Association are drafted by the Directors/Promoters.
Finally, the director will have to incorporate the company under CA/ CS/ CWA. It is mandatory to file E Forms 1, 18, and 32 where the form is digitally signed by any One Director followed by Digital Signatures of Professional who affirm that every one of the information and data provided is the right one. Endorsement of Incorporation will be produced, when the ROC supports the records and Forms submitted. The Directors are to get the MOA and AOA printed and to consent to all the consistence after the organization enlistment.
Compliance of Private limited Company
Here the Phoenix tax consultant in Chennai has given the common compliances of a Private limited company.
Appointment of Auditor: Under the form ADT-1 an auditor is appointed for 5 years of time. According to the incorporation certificate, the first auditor shall be appointed within the expiry of the one-month d date of incorporation.
Statutory Auditor: Every Private limited company must maintain its books of accounts which are audited by CA in practice holding a COP at the end of every FY. Finally, the audited report with financial statement is annexed to present it with the AGM and file it with the Registrar of companies.
Filing of Annual return: The Annual return period begins on 1st April and ends on 31st March. It is mandatory for every Private Limited company to file its annual return within 60 days from the date of holding the Annual general meeting.
Filing of FS: It is mandatory for every Private limited company to file its financial statements namely balance sheet, Profit, and Loss account annexed with directors report once they are adopted by the shareholders in the AGM. Along with form AOC –r financial statement should also be filed within 30 days of holding the annual general meeting.
Holding Annual general meeting: Every Private limited company registered under the companies ACT, 2013 should compulsorily hold an AGM before the expiry of 6 months from the end of that FY. During this meeting, the company has to lay down its financial statement along with the Director’s Report before the members.
Preparation of director’s report: Directors report will consist of ll the information required to produce according to section 134.
Benefits of Private limited company registration:
- In many cases, startup businesses need to get things on credit or borrow money. In this situation partners, personal assets, and savings are at stake. But under Private limited company registration, only investment in the business is lost. The personal assents of directors or shareholders are safe.
- For its well-known business structure corporate customers, vendors, and government agencies prefer to deal with private limited companies.
- Easy to raise funds and loan
- As private limited companies are well-structured and fewer strings attached and hence preferred investors.
- For startups, it is always difficult to hire employees and keep them for a long time. But under a Private limited company structure, it is easy to hire employees d motivate them with corporate designations and stock options.
- Easy to sell since less documentation and cost are involved in the process.
With the above-mentioned process and documents, you will be able to start your own private limited company. For a smooth and hassle-free process pick the best tax consultant in Chennai who is always ready to work for your business growth.