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Is Pvt Limited Company A Right Choice For You?

2017-08-10 17:12:13 | Legal Services

A Right Choice For You
Selecting the correct form or way to initiate a business is a very important step for an Entrepreneur. This step defines the whole future of your business. So what should you select? Should your business be a private limited company or public company? Or should it be a Limited Liability Partnership or a traditional partnership? Should you go for a One Person company or should you go for a sole proprietorship? The best choice depends on you and your requirements. Each form has its own pros and cons. Before choosing anyone you need to know about all of them. You should be able to draw a comparison between all, then only will you be able to choose a good option. Talking about the private limited company, in India, these private limited companies are governed under Companies Act, 2013. Discussed below are all the points you need to consider before choosing Pvt limited company for your business.
Pvt limited company is very common in India and is considered as a separate legal entity. Before choosing the private limited company you need to make sure that you have everything that a Pvt limited company requires. Following are the requirements you will need while registering your company:
Minimum of two directors, two shareholders, and two members. However, an individual can act as a member, a director and a shareholder at the very same time.
Maximum of fifteen directors, two hundred shareholders, and two hundred members.
A properly drafted Memorandum of Association and Article of Association with other documents like DSC and DIN.
Private limited companies are to be registered with the MCA that is the Ministry of Corporate Affairs.
The reasons due to which Private limited company seems like the right choice are:
They are considered to be a separate legal entity.
They provide limited liability to its shareholders and members. This gives much-needed protection to everyone associated with the company.
They are very common and therefore more reliable. Their reliability attracts investors. Hence, raising funds are comparatively easy.
They have the highest credibility when compared to other forms of business.
Being the most popular form of business, their incorporation is quite easy, long but still comparatively easy.
Their existence is not affected by the health status of the owner.
The reasons which will make you think twice before choosing Pvt limited company for your business are:
A minimum share capital of rupees one lakh is required.
The shares cannot be offered to a third party before offering them to other shareholders.
A statutory audit is compulsory.
All these points should be considered before making the final choice. Also, other forms of business should be studied in detail before choosing.
After the choice has been made, you need to register your company. It is very important. Tax registrations are to be done also. The registration can be done online through company registration consultants like LegalRaasta with ease and safely.
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for Section 8 company registration, Nidhi company registration, IEC registration.

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