Set up Your Dream Company with Welltax India

In India, a private limited company is a privately held entity with limited liability, and it ranks among the nation’s most favored business structures. This popularity is primarily attributed to its numerous advantages, including limited liability protection, ease of formation and maintenance, and its status as a distinct legal entity. A private limited company enjoys legal separation from its owners and necessitates a minimum of two members and two directors for its operation.

Register your startup company as private limited with Welltax™ at the lowest Fees. Welltax is an MCA (Ministry of Corporate Affairs) & MSME registered company in India. Our experienced Team CA/CS will draft & complete all the documentations on the same day.

Eligibility to form Private Limited Company

• Number of Directors- Minimum 2 and Maximum 15.
• Number of shareholders- Minimum 2 and maximum 200.
• However, one person can act as both director and shareholder.
• At least one director should hold Indian Citizenship.
• Company Name

Types of Private Limited Companies:

• Company Limited by Shares: Shareholders’ liability is limited to the nominal share amount mentioned in the Memorandum of Association.
• Company Limited by Guarantee: Member liability is limited to the amount of guarantee specified in the Memorandum of Association. This guarantee is invoked only during winding up.
• Unlimited Companies: Members of unlimited companies have unlimited personal liability for the company’s debts and liabilities. However, they are still considered a separate legal entity, and individual members cannot be sued.

Advantages of a Private Limited Company

A Private Limited Company is one of India’s most popular business structures. It offers several advantages and some disadvantages, let us explain.

• Limited Liability: Shareholders’ responsibility is restricted to the extent of their capital contribution, safeguarding personal assets from the company’s financial obligations and liabilities.
• Distinct Legal Identity: A Private Limited Company possesses an independent legal identity distinct from its proprietors. It has the capacity to own assets, engage in contractual agreements, and initiate or defend legal actions under its own name.
• Continuous Existence: The company’s existence persists irrespective of shifts in shareholders or directors. Its existence is not contingent upon the lifespan of its associates.
• Ease of Funding: Raising capital by issuing shares to investors, venture capitalists, or angel investors is easier. This structure attracts external investment.
• Tax Benefits: Private Limited Companies may qualify for various tax benefits and exemptions, making them tax-efficient entities.
• Credibility and Trust: Having “Pvt. Ltd.” in your company name often instills more confidence and trust in customers, suppliers, and partners.

Disadvantages of a Private Limited Company

• Compliance Burden: Face regulatory demands, including financial reporting, filings, and audits.
• Complex Setup: Process and cost for managing are higher than more superficial structures.
• Share Limits: Restricted share transfers; max 200 shareholders in India.
• Public Disclosure: Financial info is publicly viewable, impacting privacy.
• Exit Complexity: Selling or leaving is more complicated than with other structures.
• Slower Decisions: The involvement of shareholders and directors may slow choices.