Important Guide to private limited company registration

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Why should you consider private limited company registration ?


Starting a business is easy in India and it will  take only couple of weeks to register new business in India. There are different form of new business registration in India, among which private limited company registration is preferred by certain type of business owners, for example for starting software development company it is suggested to register private limited company rather than partnership firm registration or proprietorship firm registration. Around 16,000 new company are registered each month on an average which shows the interest of new start ups to register private limited company when compared to other form of business.

Why private limited company incorporation is preferred ?

Private limited form of business may seem complex in terms of its legal frame work, compliance etc, but the advantage of private limited company is much more than what we understand practically.

Set up of private limited company is not much cheap considering other, while it is most affordable in terms of its advantages of legal framework.

A business which requires good positive impression about its size of business and its ability to continue in long term can opt for private limited company as it is generally thought that the company name with words “PRIVATE LIMITED” is considered as a big company and something superior compared to partnership business and proprietorship business.

When a new business registration in done in form of private limited company it is well accepted that the owners are ready to invest money for business, and it will also give sense of confidence of running a big business from the day 1.

Its a pride and dream of many aspiring business men to add a designation as “Director/Managing director

Type of business for which private limited company registration is preferred

There are certain types business which requires private limited company registration due to its specific advantages regarding to nature of business. It is best to approach private limited  company registration consultant for getting best advise on suitability for your type of business and to know how it is beneficial to  your business, we have tried to give some of the business which required to register pvt ltd for its advantages.

Information technology and related business – Branding

Services and products provided by  Information technology and its related business are mainly useful for companies in same industry at large which aggregates the services of small companies and provide end result to its customers.

Majority of clients will be educated, knowledgeable, brand conscious so they prefer the service provider to be reliable and big and scalable, in the minds of client private limited company gives the sense of dealing with right person.

Due to globalization and era of internet, transactions and business relationship are spread across the globe, limited liability company is accepted globally as good form of business so your overseas clients will be happy in dealing with you.

The advantage of branding works in case of information technology company

Registration of pvt limited for benefit of branding for other type of business 

  • Event Management company registration
  • Tour and travel operator
  • E- Commerce platform.
  • Training centers
  • HR Consulting Business
  • Costume designer
  • Overseas educational consultancy
  • High end medical diagnostic lab

Benefit of branding is also applicable to above said companies and it will give competitive advantage to the business.

Construction and land promoters

In case of construction type of business clients utmost priority is reliability and trust, it is established fact that private limited company cannot be registered with simple documentation and process. Always it is established fact that branding play vital role in client acquisition.

Construction or land promoters business requires crores of investment, where there is a high investment is involved there is high risk of misuse of funds and misappropriation. The rules and regulations applicable to private limited company is regulatory in this matter and forces the managerial person and directors for accountability.

Option to add shareholder without the intervention in the management of business give additional advantage of getting investment for projects through shares. Only directors can take part in decision making process of day today business activities.

Construction business is prone to low rate of profit percentage hence the tax rate of 25 % compared to other forms gives additional practical net profits available to shareholders.

Business requires similar advantage of capital safeguard

  • Finance company
  • Chit company
  • Automobile dealership
  • Manufacturing company
  • Research company
  • Pharmaceutical manufacturer
  • Hospital
  • Large scale Super market
  • Share trading

High Third party risk business

There are some business where it is prone to high third party risk even in normal circumstances which results in huge financial loss, in that case the advantage of limited liability and separate legal entity will help to safeguard personal assets of the business owners.

Nature of business with high financial risk

  • Chit fund business
  • Finance company
  • Pharmaceuticals
  • Third party research business
  • Venture capital company

Top 10 tips to choose private ltd company name

  • Prefer minimum 3 words in company name, longer name provides better understanding of company business, longer names are approved easy as compared to shorter names, shorter name tend to have generic meaning
  • Choose name that describes your nature of business clearly, coin your business name with creativity, avoid emotional naming strategy choose the name that will be liked by your customers and give advantage to business
  • Select unique name so that there will be no confusion with any other company in similar business after approval
  • Chances of approval will be higher in case new word is coined eg : zomato , swiggy, dunzo. Most of the good Dictionary words is already included in most of the company names.
  • Do not use offensive word
  • Ignore list of words prohibited by company naming rules
  • Names with internet domain extension is not allowed
  • Names with same phonetic sound, singular, plural, will not be approved
  • Perform trademark search for all possible matches before application in similar business code
  • Perform company name availability check with different spelling for same name, use contains option while name search.

Once all preliminary points are considered at business owner level, it is advisable to consult with your company registration consultant near you for getting better understanding about availability of company name.

Company registration process in India

Brief Steps in company registration process

  1. Apply digital signature for all directors
  2. Apply Director identification number if not applied earlier
  3. Apply company name
    – If name is applied separately choose up to 6 names
    – If preference is given to name application along with complete documentation it is advisable to make sure           everything is alright in documents submitted
  4. Submit all necessary documents after name approval within the time limit after name approval
  5. Once company registration is approved incorporation certificate is issued with PAN no and TAN no.
  6. Apply other registration under different acts.

2 options for company registration process

Option 1 : Separate Name approval +  Separate documentation 

In this process name approval application is first submitted, no other documents for company registration will be submitted this method is suitable when chances of name approval is at complete discretion of registrar, for example our proposed name may be similar to some other names but if we still need to take a chance for getting a name we may go for this process as it is not consuming.

Option 2 : Integrated process

In this method name approval application is not submitted separately, proposed names are to be submitted with all other documents required for company registration , this method is suitable when we are more confident about approval of proposed company name. This method is time consuming if name is rejected as we need to prepare all documents once again with proposed name.

Apply ESI or PF separately do not apply in integrated form as approval of company registration certificate will be delayed.

3 critical tips for Quick approval

  • Submit clear and legible self attested latest documents required for registration
  • Draft clear and specific main objects for business
  • Avoid submitting unnecessary declaration in case of re submission query, provide details as mentioned in re submission query.

5 Must do things after private limited company registration

  • Appointment of auditor, auditor appointment is primary process that should be taken care, documentation accounting and filing process is much more complicated for private limited company so it is advisable to seek advise of auditor for income tax compliance, MCA compliance etc.
  • Maintain proper and accurate accounts as per income tax act and mca rules
  • Implement internal process for compliance to Companies Act and Income tax act.
  • File all income tax and MCA returns on time, delay in filing income tax return and mca return will result in payment of huge penalty. Even if there is not business undertaken in the company it is prudent to file returns and forms on time to keep the company live, continuous non filing of MCA annual returns will result in strike off of your company.
  • Consult your auditor for day today legal compliance and filing works on time. Companies act and income tax act lays down certain set of rules in accounting treatment and  limit the transaction amount and mode of transaction so in that case prior advise is necessary for regular compliance.

new private ltd company registration is easy task with the help of best company registration providers, it is the primary duty of the directors to comply with all the regulations under MCA, non compliance of MCA rules and regulations will result in large amount of penalty and results in strike off of company for continuous failure in filing MCA returns.

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