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Advantages of Private Limited Company Registration in India?


Limited Liability to Personal Assets 

In a Private Limited Company, shareholders enjoy a significant benefit-limited liability. This means that your responsibility for the company's debts is confined to the amount you've invested. Shareholders aren't personally liable, so they aren't required to cover the company's debts with their own assets. This financial security is a key advantage of this business structure.


Legal Entity

A private limited company has a distinct legal entity, separate from its directors and shareholders. This independence means that the company is solely responsible for managing its assets and liabilities, as well as debtors and creditors. The shareholders will not be held responsible for the company's losses. So, the creditors cannot proceed against the directors or shareholders to recover the money.


Raising Capital 

One of the main reasons entrepreneurs opt for a Private Limited Company, despite the compliance obligations, is its ability to raise funds through equity. This process facilitates business expansion while also mitigating liability risks, making it an attractive option for growth-oriented businesses.


Trustworthiness 

Companies in India are registered with the Registrar of companies (ROC) under the Companies Act 2013, a testament to their trustworthiness. Anyone can verify the company details through the Ministry of Corporate Affairs (MCA) portal. Also, details of all the directors are provided during the formation of the company. Hence, a private limited company form of business structure is trusted more.


Continue Existence

A company enjoys "perpetual succession," meaning it maintains uninterrupted Existence until legally dissolved. As a distinct legal entity, it remains unaffected by the death or departure of any member, providing a secure foundation that persists regardless of changes in its membership.






Different Forms of Company Registration


Partnership Firm Registration

Partnership firm registration allows two or more individuals to form a business together with shared responsibilities and profits. A partnership deed outlines the roles, responsibilities, and profit-sharing ratio among the partners. This form of business is simple to establish with minimal regulatory formalities. While partners have unlimited liability, the structure offers greater flexibility in management compared to other business entities.

Registering a partnership firm provides a legal framework that strengthens the trust between partners, ensuring clarity in roles and conflict resolution. Although not mandatory, registration offers several benefits, including legal protection and the ability to sue or be sued under the partnership name, which can enhance credibility and trust with clients and vendors.


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Proprietorship Firm Registration

Partnership firm registration allows two or more individuals to form a business together with shared responsibilities and profits. A partnership deed outlines the roles, responsibilities, and profit-sharing ratio among the partners. This form of business is simple to establish with minimal regulatory formalities. While partners have unlimited liability, the structure offers greater flexibility in management compared to other business entities.

Registering a partnership firm provides a legal framework that strengthens the trust between partners, ensuring clarity in roles and conflict resolution. Although not mandatory, registration offers several benefits, including legal protection and the ability to sue or be sued under the partnership name, which can enhance credibility and trust with clients and vendors.


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Limited Liability Partnership (LLP) Registration

LLP registration combines the advantages of a partnership firm with the benefits of limited liability. In this structure, the liability of partners is limited to their agreed contribution, protecting personal assets from business liabilities. An LLP allows partners to manage the business while offering the flexibility of a partnership and the legal protection of a corporation.

This type of business entity is ideal for professional services firms like law firms or consulting agencies, where multiple partners may operate the business together. LLPs are also preferred for their minimal compliance requirements compared to private limited companies, making them a popular choice for businesses seeking liability protection without the complexities of corporate governance.


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One Person Company (OPC) Registration

One Person Company (OPC) registration allows a single entrepreneur to start and run a business while enjoying limited liability. Unlike a sole proprietorship, where the owner assumes unlimited liability, an OPC offers protection of personal assets as liabilities are restricted to the company. This structure is ideal for individual entrepreneurs who want to operate independently but need the legal backing of a corporate entity.

OPCs are legally recognized and offer several benefits, including easy funding options and limited compliance requirements. The OPC structure helps small business owners scale their operations while minimizing personal risk, making it an attractive option for sole entrepreneurs looking to establish a formal business.


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NGO Registration (Section 8 Company Registration):

NGO registration under Section 8 of the Companies Act allows the formation of a not-for-profit organization dedicated to social causes, charitable work, or public welfare. These companies do not distribute profits to members but reinvest them into their charitable activities. Section 8 companies enjoy several tax exemptions and legal benefits, encouraging charitable work and community development.

Registering as an NGO under Section 8 offers credibility and allows organizations to receive government grants and donations. It is ideal for social entrepreneurs, philanthropists, or charitable organizations aiming to operate in a structured, legally compliant manner while promoting their cause with greater impact and transparency.


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Process for Registering a Private Limited Company?

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Step 1: Obtain a Digital Signature Certificate (DSC)

Digital signatures are required to file the forms for company formation. The registration process is entirely online, and the forms necessitate a digital signature. DSC is mandatory for all subscribers and witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).

Step 2: Name Availability

To get name approval, there are the following options:

Option 1: Facilitate name reservation through Part-A of SPICe+ Form. As of February 23, 2020, the Ministry of Corporate Affairs (MCA) introduced the SPICe+ web service for company incorporation. Part-A of the SPICe+ form enables 'name reservation' by allowing the submission of two proposed names and one re-submission (RSUB) for securing unique company names.

Option 2: Name approval through simultaneous submission of Part-A and Part-B of SPICe+ Form. You can seek name approval alongside the application for incorporation by filing both Part-A and Part-B of the SPICe+ Form together.

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Step 3: Form SPICe+ INC-32

The MCA has introduced Form SPICe+ for the registration of new companies from 23 February 2020. The incorporation under Part-B of the SPICe+ form is also web-based and streamlines the incorporation of companies. Upon name approval, the applicant can click on the link of the approved name (available on the user’s dashboard) and continue to complete the incorporation.

Part-B of the new SPICe+ form enables web-based incorporation and serves the following purposes with the benefit of a single application:

  • Application for allotment of DIN (Director Identification Number)
  • Reservation of company name
  • Incorporation of a new company
  • Application for PAN and TAN (mandatory)
  • Application for EPFO registration (mandatory)
  • Application for ESIC registration (mandatory)
  • Application for Professional tax registration (only for Maharashtra)
  • Application for opening a bank account for the company (mandatory)
  • Allotment of GSTN (Goods and Service tax registration Number) if applied for (optional)

SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a significant improvement in the process of company incorporation in India. It streamlines the incorporation process by allowing web-based entries and real-time validation of data, making it faster and more efficient.

Step 4: e-MOA and e-AOA

e-MoA refers to an electronic Memorandum of Association and eAoA is electronic Articles of Association. These forms have been introduced to simplify the process of company registration in India.

Memorandum represents the charter of the company while articles of association contain the internal rules and regulations of the company.

Earlier memorandum of association and articles of association were required to be filed physically. But now these forms are filed online on MCA portal as a linked form with SPICe+ (INC-32). Both these forms must be digitally signed by subscribers to the Memorandum and Articles of Association.

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Step 5: PAN and TAN Application

Through this single form SPICe+, you can also apply for company’s PAN and TAN. The system will auto-generate these forms after the submission of SPICe+ form. The Certificate of Incorporation of PLC is issued with the PAN as allotted by the Income Tax Department after approval of the SPICe+ Form. An email containing the Certificate of Incorporation, PAN and TAN will be sent by the MCA. The Income Tax Department will issue the PAN card.

If all the details in the form are duly filled in along with the required documents, MCA will approve the registration and a CIN (Corporate Identity Number) will be allocated. You can also track this CIN online on MCA portal.

Sit Relax

Happy Business :)

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