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PROPRITORSHIP INTO COMPANY

Private Limited Company

A private limited company is a company that is a privately-held business entity for running the business. Mostly share held by private or known stakeholders. The liability of the company is limited according to its share held by members.

Most startup companies are incorporating a private limited company for running the startup and enjoying the benefit of a private limited company

Following are the benefit of a private limited company

  1. There is a Limited risk to personal assets in a Private Limited Company.
  2. Ltd. Co. is a Separate Legal Entity.
  3. In the Private Limited Company, there would be Limited Liability for members.
  4. Shares of a company are limited by shares and shares are transfer to any other person by the shareholders. The transfer is very easy as compared to the transfer of an interest in a business run as a proprietary concern or a partnership
  5. Just as one person company can take legal action in his/her own name against another in that person’s name, a company being an independent and legal entity can sue and be sued in its own name.
  6. A company has ‘perpetual succession, which is continued or unbroken until it is legally dissolved.
  7. For a private limited company, the earlier minimum number of the share capital was Rs. 1,00,000, but at this time there is no such minimum capital compulsion. Therefore there is no pressure on minimum fund requirements.

Following are the disadvantages of a private limited company

  1. Higher Administration Costs
  2. Limited Personal Control
  3. Restricts The Transfer Ability Of Shares
  4. Members, In Any Case, Cannot Exceed 200
  • Following are the requirement of Private limited Company
    1. Obtain digital signature: -A company must apply for a digital signature, before the incorporation of company. A digital signature is required to copy all the documents and certificates.
    2. Obtain director identification number: Under sec 159 of the companies act it is required for every director to obtain an identification number from the central government.
    3. Name approval: Every company must think of a unique name for its company. Every company has to submit a 5-6 names list in accordance with the preference to ROC i.e. registrar of the company
    4. Preparation of MOA and AOA: The company prepares a Memorandum of association and articles of association. MOA is a document containing the objectives and powers of the company.
    5. Member KYC Documents:  Obtain necessary documents related to Member, a subscriber to MOA, other necessary documents.
    6. Application for the incorporation: After completion of previous steps an application for incorporating can be submitted to ROC [Registrar of company ] for incorporation of the company.
      Receiving the certificate: If after the filing of mentions all the above documents, the registrar is satisfied with all the filing documents then he will issue a certificate of incorporation in form 11. After receiving this certificate the company can move to other steps information of the company

All about Private limited Company

Private Limited Company

A private limited company is a company that is a privately-held business entity for running the business. Mostly share held by private or known stakeholders. The liability of the company is limited according to its share held by members.

Most startup companies are incorporating a private limited company for running the startup and enjoying the benefit of a private limited company

 

Following are the benefit of private limited company

  1. There is a Limited risk to personal assets in a Private Limited Company.
  2. Ltd. Co. is a Separate Legal Entity.
  3. In the Private Limited Company, there would be Limited Liability for members.
  4. Shares of a company are limited by shares and shares are transfer to any other person by the shareholders. The transfer is very easy as compared to the transfer of an interest in a business run as a proprietary concern or a partnership
  5. Just as one person company can take legal action in his/her own name against another in that person’s name, a company being an independent and legal entity can sue and be sued in its own name.
  6. A company has ‘perpetual succession, which is continued or unbroken until it is legally dissolved.
  7. For a private limited company, the earlier minimum number of the share capital was Rs. 1,00,000, but at this time there is no such minimum capital compulsion. Therefore there is no pressure on minimum fund requirements.

Following are the disadvantages of private limited company

  1. Higher Administration Costs
  2. Limited Personal Control
  3. Restricts The Transfer Ability Of Shares
  4. Members, In Any Case, Cannot Exceed 200

Following are the requirement of Private limited Company

  1. Obtain digital signature: -A company must apply for a digital signature, before the incorporation of company. A digital signature is required to copy all the documents and certificates.
  2. Obtain director identification number: Under sec 159 of the companies act it is required for every director to obtain an identification number from the central government.
  3. Name approval: Every company must think of a unique name for its company. Every company has to submit a 5-6 names list in accordance with the preference to ROC i.e. registrar of the company
  4. Preparation of MOA and AOA: The Company prepares a Memorandum of association and articles of association. MOA is a document containing the objectives and powers of the company.
  5. Member KYC Documents:  Obtain necessary documents related to Member, a subscriber to MOA, other necessary documents.
  6. Application for the incorporation: After completion of previous steps an application for incorporating can be submitted to ROC [Registrar of company] for incorporation of the company.
    Receiving the certificate: If after the filing of mentions all the above documents, the registrar is satisfied with all the filing documents then he will issue a certificate of incorporation in form 11. After receiving this certificate the company can move to other steps information of the company

 

Conversion of sole proprietor into Company

As a business develops, the requests of business and the disadvantages of a proprietorship firm could force the entrepreneur to begin the procedure for the transformation of proprietorship into a private Limited Company. A private Limited Company has many advantages that make it noteworthy to its over the proprietorship type of business, including that of restricted risk, raised equity capital, preceded with presence.

Numerous Business persons start their business as a Sole Proprietorship because of the low compliances. As the business and the wages develop, there is a need to separate the bank accounts and the tax filings of the Sole Proprietor and that of the business. To achieve this partition a potential arrangement is to convert the Sole Proprietorship into a Private Limited Company.

To convert over a Sole Proprietorship into a Private Limited Company, an agreement must be executed between the Proprietorship and the Private Limited Company (when it is incorporated) for the offer of the business. Further, such Private Limited Company can incorporate separately or take over the existing Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.

Advantages of Private Limited Company as compare to Proprietorship.

  1. Limited Liabilities: Insole proprietor firm have unlimited liabilities related to its business same is not under Company
  2. Ownership: – The compliances and rules and regulation make private limited company distinction between the owner and the entity, thereby their liability towards business is limited.
  3. Taxation: In a private limited company tax rate is lower as compared to the proprietor or person income tax.
  4. Funding solution: fundraising option is available in the company not in sole proprietorship firms
  5. Windup: a company never ever die their business continues even their owner dies but in sole proprietor demise of a sole proprietor would lead to the shutdown of the firm,

 

 

Documents required converting into PVT.

Copy of PAN Card of the Directors

Passport size photograph of Directors

Copy of Aadhaar Card/ Voter identity card

Copy of Rent agreement(If rented property)

Electricity/ Water bill (Business Place)

Copy of Property papers (If owned property)

Landlord NOC (Format will be provided)

Frequently Asked Questions

Yes, you need a minimum of two Directors for a Private Limited Company. If you are the sole owner, you can register as a One Person Company.

Any individual person and an organization can become the member of the Private Limited Company including foreigners/NRI

The entire procedure is 100% online and you don’t have to be present at our office or any other office for closure of proprietorship & incorporation of private limited. A scanned copy of documents has to be sent via mail.

There is absolutely no other payment. We will send you an invoice that is all-inclusive, with no hidden charges

TaxOSmart.com can convert Proprietorship into Private Limited Company typically in 14-20 days. The time taken also depends on relevant documents provided by the applicant and speed of approvals from government. To ensure speedy registration, please pick a unique name for the proposed Company and make sure you have all the required documents ready, prior to starting the registration process.

Yes, an NRI or Foreign National can become a Director in a Private Limited Company on acquiring DIN. However, at least one Director on the Board of Directors must be a Resident of India.