Company is a popular option to start a business in India by startups and businesses with higher growth aspirations. Pvt Ltd company is incorporated under the Companies Act of 2013, and governed by the Ministry of Corporate Affairs (MCA). It is a registered corporate structure, that provides business a separate legal identity from its owners. Hence, providing key advantages like the ability to contract in its own name, and safeguard personal assets of the owners from business liabilities.
Pvt Ltd Company and LLP both are limited liability structures. However, companies offer certain key advantages, especially for startups. Ownership of the company is defined by share capital, which is easy to transfer compared to ownership transfer in LLP. Also, it clearly differentiates management and ownership. Hence, it is preferred by VCs, angel investors and banks for providing debt or equity funding.
However, one should also consider higher compliance and mandatory audit requirement, making it an expensive structure to maintain.
The process of company registration in India is revamped by MCA, effective from 26th January 2018. Now, registration of the company can be completed within 10-15 business days. SBM consultants employs qualified company secretaries and chartered accountants, who ensure highest customer satisfaction and timely delivery of service. Entire process is managed online, with regular communication and assistance available throughout.
Pvt. Ltd. Company registration process is stringent enough to make this structure credible among others which makes fundraising or borrowing from external sources easier. The organization itself provides a number of ways to raise funds in the form of private equity, ESOP, and more.
Once the Company registration in India is done, a legal entity is born in eyes of law. This separates itself from its owners and managers. The company can operate on its own name simply by opening a bank account to own assets and enter into contract with parties. This also provides right to sue third parties in case of any defaults.
The company’s obligation or debts of does not create a charge over the owner’s personal assets. Their liability stays limited only to the capital subscribed and unpaid by them.
The separate ownership and management help both – the company and the management to focus on their potential works. The shareholders assign responsibility to operate and run the company without losing control in the form of voting.