Private Limited Company Registration in India- 5 Things one should know

Private Limited Company Registration

 

In this write-up, we would be discussing about 5 things which everybody should know about private limited company registration in India.

1)      In private limited company, the directors manage the day to day affairs of the company and they are separate from the company itself. The real owners are shareholders in the private limited company and shareholders may be different from the directors.  In other forms of entity like in proprietorship firm, proprietors are the owners of the firm and also manage the firm. Similarly, in case of partnerships and limited liability partnerships, partners are the owners and they manage the firm and LLPs respectively.

 

2)      In private limited companies as well as LLPs, name of the company needs to be get approved from ROC/MCA and it is the discretion of the ROC/MCA whether to grant approval for any particular name or not. In case of partnership firms and proprietorship firms, no such approvals of names are required for starting business.

 

3)      The entire process of private limited company registration is online and there is no requirement to make physical visit to any office either to consultants office or to the  ROC office. Further, company registration for entire India can be done by sitting at one place. In case of any amendments like name change, address change, change in partners, change in registered office etc all such amendments can be done online. This is not possible in case of traditional partnership firms as well as proprietorship firms.

 


4)      Statutory audit is compulsory in case of the private limited company. It means that every private limited company must get its account audited every year through a practicing chartered accountant even if there is Nil Transaction or very less transactions in the company. Noncompliance of audit may lead to penalty. This is called as financial audit or statutory audit. In case of LLP, statutory audit is compulsory only if the annual turnover/receipts of the LLP exceed Rs 40 lac. There is no statutory audit requirement in the case of partnership firm and proprietorship firm. It may be noted that all the aforesaid entities have to get the tax audit conducted by practicing chartered accountant and upload the tax audit report on the Income tax portal in case their annual turnover or annual receipts exceeds threshold limits like Rs 1 crore in case of trading concerns and Rs 50 lac in case of professional service firms. Failure to do so would result in penalty.

 

5)      Although Private limited company can be converted into LLP, however, LLPs cannot be converted into Private Limited Companies since there is no such provisions prescribed under the LLP Act, 2008 or the Companies Act, 2013. However a new private limited company may be registered with same name as LLP provided a No Objection Certificate has been obtained from such LLP for using the same name as that of an existing LLP.

 

Private limited company registration is one of the most popular form of company registration in India besides LLP registration and aforesaid 5 points shall be kept in mind while incorporating such companies.

Location: India

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