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A private limited company is a famous business structure in India due to its distinct characteristic features. It is a separate legal entity, allowing limited liability protection to its shareholders and protecting their personal assets from business debts. Governed by the Companies Act 2013, a private limited company can be registered with a minimum of two shareholders and a maximum number of 200 shareholders.
This type is suited for businesses that aim to raise funds for operations in the long run. It allows shareholders to transfer their shares by the company's Articles of Association (AOA) rules. However, unlike public limited companies, private limited companies cannot offer shares to the general public or trade them on the stock exchange. These companies must comply with regulations, including audits, annual filings and corporate governance norms. This structure is ideal for small and medium enterprises as it offers management flexibility and a specific degree of financial privacy.
Registering a private limited company offers various benefits to the shareholders, including a flexible management structure, legal identity and limited liability protection. Let us explore some of the most important benefits below:
Safeguards the personal assets of the shareholders from business liabilities, limiting risk of loss to the capital invested.
Enhances trust among investors, customers, and vendors. A registered company appears more legitimate and professional.
Enables businesses to raise capital through equity or debt from banks and financial institutions.
Continues to exist even in the event of a founder’s death or change in ownership, ensuring business continuity.
Can own assets, incur liabilities, sue or be sued separately from its owners. Ensures operational clarity and independence.
Enjoys various tax deductions and benefits that help reduce financial burdens and improve profitability.
The step-by-step guide for the private limited company registration process in India includes the following steps:
The first steps for online company registration are getting the Digital Signature Certificate (DSC) and Director Identification Number (DIN).
Reserve a unique name for the company as per Rule 8 of the Company Incorporation Rules. Avoid names identical or similar to existing businesses.
Once the name is approved, fill out the SPICe+ form on the MCA portal including:
Draft the e-MoA (INC-33) and e-AoA (INC-34) outlining the company's objectives and internal working structure.
After approval, the MCA issues the Certificate of Incorporation along with PAN and TAN numbers.
Understanding the various types of company registration structures in India is crucial for any business. Depending on your specific needs, you can choose from a range of options. The most common type is the Private Limited Company (Pvt Ltd). Let's delve into these structures and their benefits and drawbacks in the table below:
Title | Private Limited Company | One Person Company | Limited Liability Partnership | Section 8 Company | Partnership Firm | Proprietorship Firm |
---|---|---|---|---|---|---|
Regulation | Companies Act, 2013 | Companies Act, 2013 | Limited Liability Partnership Act, 2008 | Companies Act, 2013 | Partnership Act, 1932 | No Specific Act |
Registration | Mandatory | Mandatory | Mandatory | Mandatory | Optional | No |
Number of Owners | 2 to 200 | Only 1 | 2 to Unlimited | 2 to Unlimited | 2 to 50 | Only 1 |
Separate Legal Entity | Yes | Yes | Yes | Yes | No | No |
Protection from Liability | Limited | Limited | Limited | Limited | Unlimited | Unlimited |
Regulatory Audit | Mandatory | Mandatory | As applicable | Mandatory | Not mandatory | Not mandatory |
Transfer of Ownership | Yes | Yes (Restricted) | Yes | No | Yes (Restricted) | No |
Permanent Existence | Yes | Yes | Yes | Yes | No | No |
Foreign Ownership | Permitted | Not permitted | Permitted | Permitted | Permitted | Not permitted |
Tax Liability | High | High | Moderate | High | Low | Low |
Grih offers you the most affordable packages for Private Limited Company.
+ Govt. fee on actuals
+ Govt. fee on actuals
+ Govt. fee on actuals
We offer expert consultation in helping you with business registration in India for your private limited company.
Grih helps you check the availability of your proposed company name to ensure it complies with the regulations.
Our consultants manage DSCs & DINs for your directors & shareholders, essential for company registration.
Our team offers end-to-end business registration services, helping you complete the process on time.
We draft all registration documents to ensure correct versions are submitted, reducing risk of rejection.
We offer cost-effective startup registration services at no added costs.
We deliver business solutions based on your needs & help you register online.
Our team manages PAN, TAN & GST registration for your business, ensuring smooth operations.
Grih experts will handle the legalities, allowing you to enjoy peace of mind.
We offer post-incorporation support with compliances like annual return filing & more.
Documents needed to be filed with SPICe+ (INC-32) for a private limited company registration:
Choosing the right business registration structure is a key step towards unlocking the potential for growth and success in your business. It’s not just about tax liabilities, legal regulations, funding access, and operational flexibility. These factors, when managed effectively, can pave the way for a bright future for your business.
A separate legal entity. Shareholders' liability is limited. Can enter contracts, own assets, and function independently. Offers safety and confidence.
Used for non-profit goals. No shareholders or share capital. Members agree to pay if the company goes into debt. Profits reinvested back into business.
Shareholders have unlimited liability. Company can use its assets to settle debts. Defined under Section 2(92) of the Companies Act, 2013.