A private limited company is a type of company that has limited liability and shares that are not freely transferable. The owners’ or members’ assets are thus protected in the event of business failure. Still, it must be stressed, this protection only applies to their shareholdings – any money owed by the business remains.
Private limited companies have become increasingly popular with sole traders and entrepreneurs since they were first introduced in 1948. However, one major drawback for new businesses is that setting up a private limited company can be complicated and expensive. To protect themselves from liability, companies must adhere to certain formalities when incorporating, including filing articles of association with Companies House within 14 days of incorporation and the annual confirmation statement.
Benefits and Advantage of Registering and Private Limited Company
When it comes to starting a company, there are a few options to choose from. The most common are Sole Trader, Partnership, and Private Limited Company. There are many advantage of registration of private limited company so it is the most popular option. Here we will be discussing the benefits of a Private Limited Company.
Reduced risk of personal liability
As a sole trader, you are personally liable for all the debts and liabilities of your business. In a private limited company, you and any other shareholders are only liable for debts up to the value of your shares. That reduces the risk of having your personal assets seized to pay for the debts of the business if it fails.
Higher business profile
A private limited company is perceived as more substantial than businesses run by a sole trader. When customers place orders or award contracts, they want to be confident that the supplier has the resources to provide a reliable service. The perception is also shared by investors, so it may be easier to attract funding as a limited company.
Lower taxation
Sole traders pay income tax and National Insurance contributions on the profits of the business through an annual self-assessment tax return. The rate of income tax and National Insurance contributions is equivalent to that of a private individual and includes the same personal allowances.
A limited company pays Corporation Tax, which is based on income reduced by allowable business expenditure.
However, Corporation Tax rates for smaller businesses are lower than the equivalent income tax rates and companies can claim a wider range of allowable expenditure.
Although you will also pay personal income tax and National Insurance contributions as a director or owner of a limited company, you have greater flexibility in the way you pay yourself, which can lead to savings on your personal tax bill.
Easier access to growth funds
As we mentioned earlier, private limited companies have access to a wider range of funds for growth, including bank loans, venture capital and crowdfunding because investors see limited companies as a lower risk. You can also raise capital by selling shares in your business, although you cannot offer them for public sale.
Protected business name
When you register your business name with Companies House, the name is protected and cannot be used by any other business. Anyone wishing to register a name must check that it is available. If Companies House recognise a matching name or a name that is very similar, they will advise the business and refuse to grant permission. This level of protection makes it difficult for other companies offering copies of your products cannot ‘pass-off’ their products as genuine.
Personal income flexibility
If you are an owner or director of a limited private company, you can pay yourself a combination of salary and dividends. As dividends are taxed at a lower rate, this will reduce your tax bill and provide a more tax efficient method of remuneration compared with salary alone.
There are also other ways to take money out of the business as a director, including bonus payments, pension contributions, directors’ loans and private investments. These offer various degrees of tax efficiency.
Sole traders do not have the same flexibility. They take income from the profits of the business and the income is taxed at standard personal income rates.
Company pension provision
In a limited company, you may be able to take advantage of a company pension scheme as well as investing funds in a private personal pension scheme. Sole traders have to make their own provision by joining a personal pension scheme and making regular payments.
The Private Limited Company Registration is essential as it provides legitimacy to your business structure. If you want to go for Private Limited Company Registration in India, you can entirely rely on TAXGAADI. TAXGAADI will help you provide all the relevant information regarding Private Limited Company Registration.
For more details you can connect with our Taxgaadi experts.
Call Us: +918902989430
Whatsapp Us: +918114497880
Or you can visit: www.Taxgaadi.com
Pre-requisites for Private Limited Company Registration in India
The basic requirements to start the Private Limited Company in India includes requirements of directors and shareholder along with the documents. It is vital to collect all the requirements prior to the starting the Private Limited Company.
Minimum 2 Shareholders.
Minimum 2 Directors & maximum 15 Directors.
At least one Directors must be an India Resident.
The Shareholders & Directors can be same person.
DIN or Director Identification Number for all Directors.
DSC or Digital Signature Certificate.
Documents Required for Private Limited Company Registration
PAN Card
ID Proof
Address Proof of the Applicant
Passport Size Photos of the Applicant
NOC from Owner
Address Proof of Place of Business
Procedure for Private Limited Company Registration
Obtain DSC
Before setting up a Private Limited Company in India, DSCs are required to obtain, because, the complete registration process is entirely online and online forms require a Digital Signature. That’s why Digital Signature Certificate (DSC) is required. You can get your DSC online in just a few days from TAXGAADI.
Application Filing & Documentation
After getting DSC, our experts will help you with filing the application form & supporting documents online with the appropriate authority our team taxgaadi is team of expert and guide to completely to understand how to register company.
e-MoA and e-AoA
These two e-forms have been introduced to simplify the Registration Process of Private Limited Company in India. These two forms can be filed online at the MCA website and these forms must be digitally signed by subscribers to the AoA and MoA.
Apply for PAN & TAN
Through SPICe+ Form, the applicant can apply for the PAN and TAN of the Company. The Certificate of Incorporation (CoI) of the Private Limited Company is issued along with the PAN as allotted by the ITD (Income Tax Department) after the approval of the SPICe+ Form and this is how to register company in jaipur.
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.For more details you can connect with our Taxgaadi experts.
Call Us: +918902989430
Whatsapp Us: +918114497880
Or you can visit: www.Taxgaadi.com
