There is a tendency to avoid choosing to register a Private Limited Company as a form of business, especially amongst start-ups. Because of certain notions and myths regarding the Private Limited Company registration.
So, Read this article and make an Informed Decision when you decide not to register Private Limited as a form of business.
MYTH #1: Private Limited Company Incorporation is Costly
A few years ago, incorporation of a Private Limited Company used to be expensive with the incorporation charges reaching the limit of Rs. 50,000 or more.
This used to make one think that incorporating a Private Limited Company would burn a hole in his/her pocket.
Private Limited Company can now be incorporated for as low as Rs.13,700/- with https://hgcorporates.com/
MYTH #2: Private Limited Companies Have Higher Tax rate
Partnership firms, Limited Liability Partnership, One Person Company, Private Limited Company, and Public Limited Company all are subject to the same income tax rate of 30% in India.
Therefore, there is no benefit in incorporating a Partnership, LLP, and OPC as opposed to Private Limited for reducing tax liability.
Considering this fact, it will be judicious to incorporate a company as Private Limited Company rather than any other form of business.
MYTH #3: A Venture must have a certain level of Turnover or Sales to register as Pvt. Ltd. Company
This is not true; a Private Limited Company is one of the modes of doing business, which means it can be started from the scratch.
For that matter, even after incorporating a private limited there is no obligation that the venture must have sales or turnover.
MYTH #4: Minimum Paid-up Capital of Rs.1 lakh is required to register a Pvt. Ltd. Company
As per the Companies (Amendment) Act, 2015, No minimum paid-up capital is required to apply for Private Limited Company Registration.
The Companies Act 2013 earlier mandated that all Private Limited Companies have a minimum paid up capital of Rs.1 lakh.
This meant that Rs.1 lakh worth of money had to be invested in the company by purchase of the company shares by the shareholders to start a business.
However, the Companies Amendment Act, 2015 relaxed the minimum requirement for paid-up capital. Therefore, there is now no requirement for any minimum capital to be invested to start a private limited company.
MYTH #5: After Incorporation, changes in Private Limited is tough or not possible
Again this is not the reality. Private Limited Company is one of the most flexible business structures available for startups/entrepreneurs.
You can make all kinds of changes from the same day as your business is incorporated.
Like modification in its capital, shareholding, directorship, business scope, office address and literally you can change everything of an enterprise.
MYTH #6: Commercial Office Space is required for Incorporating a Company
You can show your own residential or rented home address as the registered office address of the firm.
This office address can be changed at any time after incorporation of the company.
MYTH #7: It is Costlier to maintain or need In-house legal team to comply with laws
This is not the truth, Private Limited startup requires very minimal compliances of annual roc filings, accounting and tax filings.
We can help you with these services at a nominal cost. We take care of all of your compliance requirements so that you can focus better on your business growth.
For help, call now:
MYTH #8: Shareholders Meetings Are Required More Often
As per Companies Act, 2013, it is mandatory for a Private Limited Company to hold an Annual General Meeting.
However, Board meetings are necessary only when special resolutions need to be passed.
Meetings related to the maintenance of legal compliance of a Private Limited Company is a matter of minutes and is not a tedious or hefty task to perform.
Hence, whether it is Annual General Meeting or Board Meetings, it should not come in the way of choosing to register a Private Limited Company as a form of doing business.
MYTH #9: Private Limited Registration has to be renewed every year
This is a crazy thing, there is no such renewal required.
Once the Company is incorporated it will remain for eternity until the company is legally closed by the owners.
There is no renewal, or registration or any fees to be paid to any government or private agency.
The only requirement is that Company has to file yearly returns with the Income Tax department and ROC (Registrar of Companies).
MYTH #10: Pvt. Ltd. Companies cannot be shareholders or invest in another Pvt. Ltd. company.
In the eyes of law, A Company is defined as an “artificial person”.
So, once Incorporated Company can invest in the shares of another corporation.
This means human beings, as well as incorporated companies, can invest into Private limited business.