India has been a hot destination for entrepreneurs seeking credibility, limited liability, and ease of raising capital by setting up a private limited company. It is hard to estimate the fees for registering a private limited company in India because government charges, professional fees, and other additional expenses vary. This guide expounds fees structure and clarifies the whole process, requirements, documents, and advantages of setting up a private limited company in India.
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Meaning of Private Limited Company Registration
A private limited company is one of the business forms existing in India, which offers limited liability to its shareholders; therefore, they can limit their personal liability to the amount invested. In contrast to public companies, private limited companies do not allow more than 200 shareholders, and their shares are not publicly traded in any stock exchange. Registration of a private limited company gives a legal identity to the business and creates a separate legal entity for holding assets, incurring liabilities, and entering into contracts independently of its owners.
Registration Requirements for a Private Limited Company
Before moving on to the registration process, several requirements must be fulfilled in order to ensure a hassle-free registration process. These include:
Minimum Number of Directors: A private limited company shall have a minimum of two directors. All directors must be individuals with a valid DIN.
Minimum Shareholders: The minimum number of shareholders required is two; however, the maximum possible is 200.
Distinct Company Name: The proposed name for the company must be distinct and not similar to any existing registered company name or trademark.
Registered Office Address: The company has to have its registered office address in India, through which all official correspondence is supposed to be addressed.
Authorized Capital: Though there is no minimum capital requirement, while registering, the company has to declare an amount of authorized capital.
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Documents Required for Registration
The following are the documents required to register a Private Limited Company in India:
Identity Proof: Passport, PAN Card, or Driving License of all directors and shareholders.
Address Proof: Utility bill or bank statement from the last three months for all directors as well as those shareholders whose addresses are known.
Registered Office Proof: A utility bill, and a rental agreement if the registered office is rented, along with a NOC from the property owner.
Director Identification Number (DIN): Directors must have DIN. The DIN number can be achieved through a form available at the portal of the Ministry of Corporate Affairs.
Digital Signature Certificate (DSC): All directors must be provided with a DSC, which acts as an electronic signature for filing purposes.
Registration Fees of a Private Limited Company
The registration fees of a private limited company depend on various aspects such as the authorized capital, professional charges, and government fees:
Government Fees: The base fee of the government to register a company varies according to the authorized capital of the company.
Professional Fees: Charges for the procedure from Chartered Accountants or Company Secretaries.
Stamp Duty: This sum varies according to place of the registered office.
Other Charges: This may incorporate DIN and DSC application fees, name approval, and GST enrollment if required.
Authorized CapitalGovernment FeesUp to ₹1 lakh₹500₹1 lakh - ₹5 lakh₹2,000₹5 lakh - ₹10 lakh₹4,000Above ₹10 lakhBased on MCA scales
Also, read to know the classification of companies.
Benefits of Private Limited Company Registration
Private limited company registration offers a lot of benefits as compiled below:
Limited Liability: The shareholder is protected from company liabilities beyond investment.
Legal Entity: As far as the law goes, it considers the firm to be a separate identity from the owners.
Capital Raising Ease: They can easily attract investors for raising funds, as a company provides the options to raise either equity or debts.
Succession: Even the change of shareholders or directors does not cause the perpetuation of the company.
Credibility: Registered companies have more credibility with customers, suppliers, and lenders that may help to enhance the business's credibility.
Steps for Private Limited Company Registration
Private limited company registration is a multi-step process, from applying for DIN and DSC to the incorporation of the company. Here is an overview of the registration process:
Obtain a Digital Signature Certificate: The directors will need DSCs as all the documents provided on the MCA portal need to be digitally signed.
Apply for Director Identification Number: DINs shall be acquired by the directors as it is a unique identification number for every director
Name Reservation: The proposed name of the company to be reserved shall be done through the MCA portal by filing a RUN application for Reserve Unique Name.
File for Incorporation: File e-Form SPICe+ for the incorporation of the company which would include the name, address, directors, and the capital.
Certificate of Incorporation: MCA issues the Certificate of Incorporation, that is the certificate which confirms that the company is incorporated and it can begin with its business.
PAN and TAN: Post registration, the company must obtain PAN and TAN from the Income Tax Department.
Bank Account and Other Registrations: Open a bank account in the company's name and, if required, register for Goods and Services Tax (GST).
Additional Considerations
Annual Compliance Fees: After registration, companies have to file annual returns, undergo audits, and keep records.
Shareholding Pattern: Companies having intricate patterns of shareholding or foreign investors may have a bit more procedures to be undertaken.
Conclusion
Forming a private limited company gives the entrepreneur credibility, liability, and scalability. Although this is a collection of steps together with numerous fees, this ensures that the firm in all ways meets the legal compliance requirements, which proves helpful in the long run. It really helps to know what all these fees mean to an entrepreneur to budget accordingly to ensure that the registration journey is smooth and easy.
Fees for registration of Private Limited Company FAQs
1. What is the minimum capital required to register a private limited company in India?
There is no minimum amount of capital required, but an authorized capital declaration is mandatory.
2. How long does it take to register a private limited company?
10-15 days is what it usually takes, pending the document preparation and processing time at MCA
3. Is a company secretary compulsory for a private limited company?
There's no need to have full-time company secretaries to have one. One may be appointed when desired to have such an appointment.
4. Can foreign nationals also be Directors of a private limited company in India?
Yes, they can, and such a Foreign National/Resident with a valid DIN and a valid DSC.
5. What are the annual maintenance costs for a private limited company?
Maintenance costs comprise return filing every year, audit fees, and other compliance costs usually in the range of ₹10,000 to ₹30,000 per annum.
