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Why is Private Limited Company Advice for Startups and Entrepreneurs?

Private Limited Company

Are you studying about getting into the business? There are lots of information out there on what you should do before you start a business, but you have to come up with a good idea; you have to know what kind of business entity to form and many other things. Startups and entrepreneurs nowadays get various benefits under the business entity they choose with this we have brought you articles which will familiarize you with multiple interests of the private limited company registration. If your business has an ambition for going international, then it is best to start a private limited company as it can be operated on the international level. For startups to have a strong foundation and raise funds in future Private Limited Company is a stable option.

The critical key point for a private limited company to keep in mind for startups is as follows:-

  1. Private limited company shall have a minimum of two directors.
  2. Maximum 200 and Minimum 2 members are required in Private Limited Company
  3. There is no requirement for minimum capital.
  4. The Maximum number of directors required for Private Limited Company is 15.
  5. If a member of a Private Limited Company age is under 18, the registration document must be signed by a guardian or a parent on their behalf.

Following are the advantages of the Private limited company for startups and entrepreneurs:-

  1. Separate Legal Entity: – An entity means something which has a real existence. A company is a juristic person and legal entity established under the Company Act. A juristic person is a person who is not a human being but a person created under law how can take legal action. The private limited company has the extensive legal capacity which can own property as well as also incur debts.
  2. Limited liability: – The Liability of shareholder or member are limited. No personal assets are at risk as the company itself is fully liable for its debt. If the Private Limited Company makes a loss, shareholder won’t have to pay the loss beyond their Unpaid Share Capital.
  3. Perpetual Succession: – Any change in member or directors does not affect the existence of the company. The longevity of its members does not determine a company’s life.
  4. Borrowing capacity: – A company enjoy better avenues for the borrowing of funds. Many sources of finances are available which increase the source of funds. In turn, increasing credibility which helps the company to grow. Financial and banking institutions prefer to render substantial financial assistance to a company.
  5.  Easy transferability:- In private limited company transfer of the share is easy with no long process. The ownership of a business can be easily transferred by transferring the shares.
  6.  Taxation:- Due to GST and pay hst online the process of integrating all taxes, the process of paying tax and many more process related to tax has been simplified by Government of India to easy down the burden of tax and to promote startups as this saves the time and energy.

Following are Step to register Private Limited Company for Startups:-

Step 1:- Procure a digital signature certificate

A digital signature certificate is a first step in the registration of the private limited company. The digital signature certificate is commonly known as DSC which is issued by certifying authority with the validity of 1 or 2 years.

Document required for DS:-

  •    Passport size photograph of the applicant
  •    Self-attested Address proof of the applicant
  •    Self-attested PAN Card applicant

Step 2: Obtain Director Identification Number

Director Identification Number is also known as DIN is a unique number assigned by the Ministry of Corporate Affairs to the individual making an application for allotment of DIN with lifetime validity.

Document required for DIN:-

Passport size photograph of the applicant

Self-attested address proof of the applicant

Self-attested PAN Card of the applicant

Step 3: Name Approval

We can file the form for name approval after DIN and DSC are obtained. We have to mention one name and maximum of six names in name approval. It will take 4-5 days for the day of confirmation of name then it is valid for 20 days.

Step 4: Company Registration and Incorporation

For ROC Filing, we have to prepare some Documents and forms. Then file the forms to ROC after getting name approval. This process of preparation and filing of form and get the permission of incorporation from MCA will take approx 5-7 days.


To enter a startup-friendly Indian market a large number of entrepreneurs would incorporate their entities which are expected in the coming years. Any startup would need its very own company and for these Private limited companies are a boon as it has various advantages which makes it a better option for startups as well as for entrepreneurs. After the amendment in the Companies Act, the government is providing more opportunities to the startups to enter in the market by simplifying the rules and regulations. Due to GST the process of integrating all taxes, the process of paying tax has become simple that has to save a lot of time and energy of entrepreneurs and startups for managing the various taxes which has easy down the tax burden. Hope this article helps to understand the advantages of a Private Limited Company.


Additional Reading:-

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