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A private limited company registration is one of the most popular and trusted forms of business structure in India. It is ideal for startups, small businesses, and enterprises seeking limited liability and separate legal identities.
Incorporating as a private limited company offers a range of advantages, such as a clear separation between personal and business finances, enhanced credibility, and easier access to funding and investments.
This combination of legal protection, operational flexibility, and financial discipline makes the private limited company a preferred choice in India’s dynamic and competitive market. Combine that with RegisterKaro’s expert assistance and cost-friendly pricing, and you are set.
Entrepreneurs or aspiring business owners planning to establish a private limited company in India should evaluate the following types of private limited company structures before proceeding with company incorporation:
The liability of shareholders is restricted to the nominal value of shares specified in the company's Memorandum of Association.
The liability of members is confined to the guaranteed amount mentioned in the Memorandum of Association, which is enforceable only in the event of the company's winding up.
Members bear unlimited personal liability for the company's debts and obligations. However, the company retains its status as a separate legal entity, shielding individual members from direct lawsuits.
This overview highlights the key types of private limited companies and their features, catering to diverse business requirements and objectives. From companies limited by shares to unlimited companies, each category offers distinct benefits and protections. Choosing the right structure ensures that businesses align with their goals while managing liabilities and compliance effectively.
Still confused? Get in touch with an expert Private Limited Company Registration Consultant and receive answers to all your queries instantly for free.
To understand whether registering your company as a private limited would be ideal or not, check out these characteristics:
A Private Limited Company has a distinct legal identity, separate from its owners and shareholders. This means:
The liability of shareholders is limited to the unpaid amount on their shares. Basically:
A Private Limited Company must have a minimum of 2 and a maximum of 200 members (excluding employees and former employees holding shares).
The company must have a minimum authorized share capital of INR 1,00,000 (this can be increased as required). As for paid-up capital, the Companies Act, 2013 no longer mandates a minimum paid-up capital for Private Limited Companies.
Shares in a Private Limited Company are not transferable to prevent hostile takeovers. Shareholders need the approval of other members to transfer shares, ensuring control remains within a trusted group.
A Private Limited Company cannot invite the general public to subscribe to its shares, debentures, or deposits.
A Private Limited Company must have at least two directors (a maximum of 15 directors; this can be increased by passing a resolution).
The company's existence is not affected by changes in its ownership or management, such as death, insolvency, or resignation of shareholders/directors.
The ownership of the company is divided among shareholders, while the management is typically handled by directors.
A Private Limited Company can raise capital from private investors, venture capitalists, or angel investors.
Private Limited Companies enjoy specific tax benefits under Indian corporate tax laws, some of which are:
A Private Limited Company operates under the provisions of the Companies Act, 2013.
The company's details, including incorporation, directors, and financial records, are publicly available on the MCA website.
While maintaining corporate governance standards, Private Limited Companies enjoy operational flexibility compared to public companies.
Here's everything you need to know about Private Limited Company registration and how to get started.
Registering as a Private Limited Company offers several key benefits that make it a popular choice for entrepreneurs and business owners in India.
A private limited company ensures that shareholders have limited liability. This means their personal assets are safeguarded against any debts or losses incurred by the business.
Shareholders are only responsible for the company's liabilities up to the amount they have invested, providing a critical safety net for individuals.
Once registered, a private limited company becomes a separate legal entity, independent of its directors and shareholders. This separation means that the company itself is responsible for managing its assets, liabilities, and obligations.
Shareholders and directors cannot be held personally accountable for the company's financial losses, ensuring a clear boundary between personal and business responsibilities.
Private limited companies are an attractive option for raising funds. Their structured nature and credibility make it easier to attract equity investment from venture capitalists, angel investors, and other funding sources. This structure supports growth and expansion while keeping personal financial risk to a minimum.
Appealing for raising funds due to their structured nature and credibility, attracting equity investment from venture capitalists and angel investors. This setup fosters growth while minimizing personal financial risk.
Being registered under the Companies Act and governed by regulatory bodies adds credibility to a private limited company. Prospective clients, investors, and partners can verify its details through official government platforms, creating a sense of trust.
It demonstrates a commitment to professional business practices and regulatory compliance, building trust with stakeholders.
Unlike sole proprietorships or partnerships, a private limited company enjoys perpetual succession. This means the company continues to exist regardless of changes in ownership, such as the death or resignation of directors or shareholders. The continuity ensures long-term stability and reliability.
Private limited companies offer ease of ownership transfer through the sale or transfer of shares. It ensures that ownership can be passed on to others without disrupting the company's operations. This flexibility in ownership transfer is advantageous for business growth and succession planning.
Compare the different business structures to determine which is right for your needs
Feature | Private Limited Company | Limited Liability Partnership (LLP) | Sole Proprietorship | Partnership | One Person Company (OPC) |
---|---|---|---|---|---|
Legal Status | Separate Legal Entity | Separate Legal Entity | No Separate Legal Entity | No Separate Legal Entity | Separate Legal Entity |
Liability Protection | Limited to the extent of shares held | Limited to the extent of contribution | Unlimited liability | Unlimited liability | Limited to the extent of shares held |
Minimum Members | 2 Directors, 2 Shareholders | 2 Partners | 1 Proprietor | 2 Partners | 1 Director, 1 Shareholder |
Owners | Restricted, subject to regulations | Restricted, subject to regulations | Not Applicable | Not Restricted | Restricted |
Compliance Required Documents | High (Annual filings with MCA, financial statements) | Moderate (Annual filings with MCA) | Low (Basic tax filings) | Moderate (Partnership Act, Tax filings) | High (Annual filings with MCA, financial statements) |
Tax Benefits | Eligible for various deductions and exemptions | Tax benefits for business expenses | Limited Deductions | Tax Benefits for business expenses | Eligible for various deductions and exemptions |
Investor Friendly | Highly suitable for investors and venture capital | Limited investor appeal | Not suitable | Not suitable | Limited investor appeal |
Regulatory Authority | Ministry of Corporate Affairs (MCA) | Ministry of Corporate Affairs (MCA) | No specific authority | Registrar of Firms (RoF) | Ministry of Corporate Affairs (MCA) |
Ideal for | Startups, SME's and companies with growth potential | Professional firms and service providers | Small traders and local businesses | Small to medium-sized businesses with shared ownership | Individual Entrepreneurs seeking to establish a separate legal identity |
To register your Private Limited Company, you'll need to prepare and submit the following documents:
Identity and Address Proof:
Required Documents:
Follow these essential steps to register your Private Limited Company in India:
Maintaining compliance is crucial for Private Limited Companies to ensure legal adherence and avoid penalties. Here's a detailed breakdown of the key compliance tasks:
Every Private Limited Company must file financial statements with the MCA to maintain accountability.
File Now!Filing Income Tax Returns is mandatory for all Private Limited Companies, regardless of profit or loss.
File Now!If registered under GST, companies must file periodic returns showing all sales and purchases.
File Now!With RegisterKaro, you can leave all the complexities to the professionals and focus on setting up your company. You will get:
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Get answers to the most common questions about Private Limited Company Registration in India
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