A company is an association of person registered under the present Act or the Indian Companies Act, 1956 as per Section 2(20) of the Companies Act, 2013. In this article, we will discuss the cost of private limited company registration in India.
The Companies Act of 2013 has also defined the private limited company in Section 2 ( 68) of the Act. It defines private companies as follows:
” private company” means a [company having a minimum paid-up share capital [Omitted] as may be prescribed, and which by its articles],—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;”
The Cost of private limited company registration in India might seem very high in the beginning. However, it is very reasonable.
Registration of a private limited company
A private limited company can be incorporated in 6-7 steps which are as follows:
Step 1: Prepare/ Obtain a DSC( digital signature certificate) wherein the DSC application form is filled with the required details and, most importantly, a digital signature of the relevant authority.
Step 2: Apply for DIN ( Directors Identification Number), wherein the directors are required to fill Form DIR -3 and submit it to the registrar’s office along with the requisite fees and any document as required. The director will get a very important DIN number.
Step 3: File the RUN ( Reserve Unique Name) form along with requisite fees before the ROC( Registrar of Companies) for the company’s name approval.
Step 4: Apply for a certificate of incorporation of the company.
Step 5: File SPICE( Inc 32) as per the latest amendment in the Act. Along with all the required information, the digital signature is required to be done by the authority.
Step 6: File for e-MOA and e-AOA via form no. Inc 33 and Inc 34, along with the digital signature of the subscribers of the company to be incorporated
Step 7: The last and final step is to file form 49a for PAN and 49b for TAN.
After successfully filling these forms and following the steps mentioned earlier, the MCA( Ministry of Corporate Affairs) will approve the registration and allocate a CIN ( Corporate Identity Number). The applicant can track the status using this number.
Cost of private limited company registration
Starting a company has become a popular way among startups, especially private limited companies because of various advantages offered by such a type of company. For incorporation of the company, certain costs need to be paid.
At the first instance, the Cost of Private Limited Company Registration can seem very high. People aspiring to start a private limited company don’t show much enthusiasm because of the fear of high costs.
The Cost of private limited company registration can vary because of various factors. The costs depend on factors like authorized share capital etc. The Cost of private limited company registration has been changing drastically over the years. For instance, earlier, the Cost of registration was majorly dependent on the authorized share capital of the private limited company. Still, as per the amendment in the Companies Act, 2013, the minimum paid-up capital requirement was waived off, which has changed the Cost of registration. Now, the Cost of registration is less than what it used to be.
Also, now the registration process has shifted to online platforms. That also has affected the Cost of incorporation of a private limited company.
As per the latest amendment in the Companies Act, 2013, five registration steps are merged into one step. An integrated e-form SPICe form has been introduced, which compiles the Company Name, Incorporation of the company, Director’s Identification Number ( DIN) of all the directors, PAN and TAN for newly incorporated companies. Such policies and amendments help reduce the Cost of incorporation to a larger extent.
Following are some costs involved in the incorporation process of the private limited company:
- The Cost of incorporation of a private limited company may vary from Rs 6,000 to Rs 30,000. The Cost depends on the number of directors, members, share capital etc. In addition to this, if a company takes professional help for the completion of incorporation, costs will increase.
- The costs involved in paying taxes of a private limited company may vary from Rs 1500 to Rs 15000. There are different kinds of governmental registration like Goods and Services Tax registration, Value Addition Tax Registration, Import and Export registration in case of businesses involved in such business, MSME registration costs in case of small scale businesses etc. These registrations involve different costs, also including the kind of professional help they take.
- Further, as per section 385 of the Companies act, 2013, Rs 6000 perform on registration of reports are charged.
- In addition to these costs, a penalty will be charged if there is any delay in filing the form.
A private limited company is the most preferred type of company for startups in India. But before incorporating a company, one must look into the Cost of private limited company registration in every step of the successful incorporation of the company. Moreover, it is to be kept in mind that all the compliances and rules set by the Companies Act of 2013 are abided by. Non- compliance will only increase the Cost in the form of a penalty and will also ruin the reputation and image of the company built with so much effort and time of the members.
Read our article:Private Limited Company Is Better For Startups : Here’s why