The Company's Act 2013 under the Ministry of Corporate Affairs
(MCA) governs company registration in India. The size and stakeholder count
affect how much it costs to register a business in India. Depending on the
requirements and nature of their business, an entrepreneur can register a
company under a variety of business structures. As a result, the state and kind
of business structure influence the incorporation fee. The cost of forming a
private limited company in India is briefly discussed in the current article.
Establishing a private limited company, which offers its
shareholders limited liability while imposing specific ownership limits, is one
of the most highly advised ways to launch a business in India. The partners
will be in charge of it if it is an LLP. A private limited corporation, on the
other hand, permits directors and stockholders to be distinct legal persons.
How to Register a Company in India
By registering their business, start-ups in India might get
an advantage over rivals who are not registered. Despite the fact that the
registration procedure is becoming more difficult and contains several
compliance criteria. You don't need to worry because there are legal experts or
registration companies that can help you at every stage. For the registration
of a Pvt corporation, our team of experts can offer complete support.
Step 1: Run Name Approval.
The registration of your preferred name is the first stage
in the formation of a corporation. You must first file a request for name
approval to the Ministry of Corporate Affairs (MCA) in order to reserve a name
for your business. Your application for name approval may contain one or two
prospective names as well as an explanation of your company's goals. If your
first pick is rejected, you are free to suggest one or two other names. The MCA
typically grants name requests in five business days.
Step 2: The Digital Signature Certificate (DSC) for Directors
Traditional signatures are not accepted by the Indian MCA.
All MCA filings must instead have a digital signature that has been verified by
an Indian certifying authority. As a result, before the firm is incorporated,
all directors must have digital signatures.
Directors need to successfully complete a video KYC process
and produce a copy of their identification documents in order to get a digital
signature. The closest embassy should apostille the director's passport and any
other necessary documents for the company's registration if they are a foreign
person.
Step 3: Submitting the Application for Company Incorporation
Submit the incorporation application in SPICe form together
with all pertinent attachments to the MCA after getting the required digital
signatures. The company's Memorandum of Association (MOA) and Articles of
Association (AOA) are attached to the application for incorporation. The
company can obtain the Incorporation certificate and PAN if the MCA finds the
incorporation application to be complete and acceptable. All applications for
incorporation are typically approved by the MCA in five working days.
Compliances with Private Limited Company Registration
In order to prevent potential fines and legal implications,
it is vital to follow several compliance laws after the procedure of company
registration in India. The following are some of the major post-registration
requirements:
Appointment of an Auditor: Every Indian firm must appoint a
practicing, licensed, and registered Chartered Accountant (CA) within 30 days
of incorporation.
Director DIN KYC: Every year, people who have a Director
Identification Number (DIN) are required to go through a DIN KYC process. The
company might obtain the DIN throughout the process of incorporation. This aids
in confirming the phone number and email address listed in the MCA's records.
Commencement of Business: Within 180 days of incorporation,
the shareholders of the business must deposit the subscription amount outlined
in the MOA, and the company must open a bank current account. Therefore, the
shareholders of a company founded with a paid-up capital of 1 lakh must deposit
1 lakh into the firm's bank account in order to obtain a business incorporation
certificate. A copy of the bank statement should also be submitted to the MCA.
MCA Annual Filings: Each firm registered in India is
required to submit a copy of its financial statements to the MCA each fiscal
year. The first MCA annual return may be included in the annual filing for the
next fiscal year by a corporation that incorporates between January and March.
The MCA annual return is made up of forms MGT-7 and AOC-4. Both of these
documents shall be digitally signed by the Directors and by an individual in
the workforce.
Income Tax Return Filing: Using Form ITR-6, firms must
submit an income tax return for each fiscal year. Regardless of the date of
incorporation, the business must file its income tax returns by the deadline
for each fiscal year. The director's digital signature must be used to sign the
company's income tax return.
Conditions for Forming a Private Limited Company
A firm must fulfill a specified set of requirements prior to
incorporation. These circumstances include the following:
1. Directors and Members, first
As previously stated, a private limited company must have at
least two directors and no more than 200 members in order to be registered
legally in India. According to the 2013 Companies Act, this is a necessary
criterion. The Directors will be required to meet the following requirements:
- Each director must have an MCA-issued DIN on them.
- A director must have spent at least 182 days in India
during the preceding calendar year in order to qualify as an Indian resident.
2. The company's name
There are two things to take into account while choosing a
name for a private limited company:
- Identifies the primary activity
- Private Limited Company.
3. Registered office address
The business should provide the company registrar with the
official address of the registered office after the registration process is
complete. The registered office is the main area where business is conducted
and is where all company-related paperwork is kept.
4. Obtaining Extra Documents
Every business must acquire a DSC in order to validate the
legitimacy of papers supplied electronically. Additionally, the company needs
the credentials of experts it hires for diverse operations, like secretaries,
chartered accountants, and cost accountants.
What Does It Cost to Register a Private Limited Company in India?
Depending on the number of Directors, members, authorized
share capital, and professional expenses, the cost of incorporation or
registration for a Pvt Ltd Company could range from INR 6,000 to INR 30,000.
The cost of engaging a professional may vary depending on how complex the
assignment is.
Costs Associated With A Few Key Registrations For A Private Limited Company.
In India, there are several business structures, industries,
and services. No matter the sort of business organization, each one needs to
register with the government. Examples include GST registration, VAT
registration, IEC registration if you are in the import-export business,
Professional Tax registration, EPF registration if you are in a profession, and
MSME registration for small and medium-sized businesses.
There are a variety of costs associated with registration,
including professional and governmental fees. The cost of registrations may
range from INR 1500 to INR 15,000, depending on the difficulty of the duties,
state taxes, etc.
Required Compliances:
The Private Limited Company is required by the Ministry of
Corporate Affairs to comply with specific requirements as of the time of its
establishment, including making certain declarations, communicating the
appointment of an auditor, communicating board meeting minutes, filing annual
director reports, etc. A Private Limited Company must fulfill a number of
compliances in the allotted time. Including the following:
First Board Meeting: Within 30 days of the company's
incorporation, the Board of Directors must hold its first meeting. Each
director shall get notice of the BM at least 7 days before to the meeting.
Following Board Meetings: There must be a minimum of four
board meetings every year, with no more than 120 days between meetings.
Directors' Disclosure of Interest Forms: At the first
meeting in which he participates as a director, every director; or
- Each fiscal year's first Board meeting.
- or whenever there is a modification to disclosures.
Should state his involvement or interest in any company,
body corporate, firm, or other association of individuals (including
shareholding interest) in Form MBP-1.
- Form MBP-1 must be preserved in the business's records.
Initial Auditor: Within 30 days of incorporation, the BOD
shall appoint the company's first auditor, who will serve in that capacity
until the end of the first annual general meeting. The filing of an ADT-1 is
not required in the case of the First Auditor.
Following Auditor: The auditor will be chosen by the BOD at
the company's first AGM and will serve in that capacity until the conclusion of
the sixth AGM. The BOD will notify the ROC of the appointment by filing Form
ADT-1. The company, not the auditor, is in charge of submitting Form ADT 1
within 15 days of the appointment date.
Annual General Meeting: Annual General Meetings must be held
by every company on or before September 30th of each year, during regular
business hours (9 am to 6 pm), during regular business hours, either at the
company's registered office or in the city, town, or village where the
registered office is situated. The same must be disclosed 21 days in advance.
Annual Return (Form MGT-7) Submission: Within 30 days of
incorporation, the BOD shall appoint the company's first auditor, who will
serve in that capacity until the end of the first annual general meeting. The
filing of an ADT-1 is not required in the case of the First Auditor.
Financial Statements (Form AOC-4) Filing: Within 30 days of
the Annual General Meeting, every Private Limited Company is expected to
provide its Balance Sheet, Statement of Profit and Loss Account, and Director
Report in this form.
Statutory Accounts Audit: At the conclusion of the financial
year, every Company is required to prepare its accounts and have them audited
by a Chartered Accountant. For the purpose of filing it with the Registrar, the
Auditor must produce an Audit Report and the Audited Financial Statements.
Fees for each of the aforementioned compliances, which are
necessary for company registration, range from INR 2000 to 20,000. For these compliances, it is suggested that
you contact a specialist.
Ancillary Registration Fees: Regardless of the sort of
company being created, every business must complete a few required government
registrations, such as the GST registration. IEC registration is required if
the company seeking registration deals with imports and exports. Professional
tax must be paid and EPF registration must be completed if the firm being
registered is run by professionals. To receive the tax benefits, it is
necessary for small businesses to register as MSMEs. Thus, it is clear that the
professional fees and the government cost vary based on the type of company and
the many registrations required. Therefore, it might fall anywhere between
INR1500/- and INR15000/-.
Other costs and legally required compliances would also be
included in the registration of a private firm. Again, the professional charge
for them will range from $2,000 to $20,000. As a result, the costs associated
with maintaining a private limited business do not end with registration. The
registration of a private limited company is only the first step toward a
successful business; the next steps include agreeing to a variety of other
compliances to guarantee the firm runs smoothly.
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