PRIVATE LIMITED COMPANY REGISTRATION IN INDIA- POPULAR MYTHS

ezybizadviser

PRIVATE LIMITED COMPANY REGISTRATION

Every month, thousands of companies are incorporated in India. There are 2 types of entity registration in India i.e. traditional types where company registration takes place in the form of sole proprietorship and partnership firms and nontraditional types like Private Limited Company Registration, Public Limited Company Registration, Limited Liability Partnership etc.

Whenever any entrepreneur approaches a consultant for new business set up in India, majority of them opts for traditional types of registration and later wants to convert the same into nontraditional types.

There are many popular myths or beliefs in the mind of new entrepreneur which stops them to opt for non traditional types of entity registration in India.

Let’s discuss about some of the popular myths or beliefs about private limited company registration in India.

Popular myths or beliefs about Private Limited Company Registration

1) Company registration is an expensive proposition

Quite contrary to the popular belief that private limited company registration is a costly affair, the fact of the matter is that now, the government has reduced the mandatory fees payable to ROC tremendously. Accordingly, upto authorized and paid up capital of Rs.15 lac, very nominal fees is payable to ROC. Depending upon the level of professional who assists in company incorporation, the entire fees for private limited company registration is anywhere between Rs.10,000 to Rs.15,000 for capital upto Rs.15 lac and 2-3 directors and shareholders which is quite minimal as compared to similar fee for incorporation in foreign countries.

2) Compliance cost of private limited company is high as compared to other entities

This is second popular myth that compliance cost of private limited company is very high as compared to other entities. The fact remains that in case of private limited company, 2 additional compliance need to be done. First is statutory audit or financial audit needs to be conducted through practicing chartered accountant irrespective of turnover of the company. Second is that some annual forms need to be filed before ROC every year. Besides these 2 additional compliance, all the entities have to do periodical compliance relating to accounting, GST filing, Tax Audit, Income Tax Return filing etc.

3) Too much time is involved in holding 4 board meetings and 1 Annual General Meeting

This is again a misconception that lots of time is involved in holding BM and AGM. In fact, board meetings may be held in no more than 30 minutes to 45 minutes.

4) Income Tax Rates of Private limited companies are higher as compared to other forms of entity

This assumption is partially correct since tax rates of only sole proprietorship and LLPs can be slightly less. Otherwise, all other entities like Private Limited Company, Public Limited Company, Partnership firms and OPC are taxed at 30%. Also, in case of proprietorship, in case of income more than Rs.10 lac, it will also be taxed at 30%

Thus, there are lot of unfounded myths and belief about private limited company registration in India which need to be broken by way of proper professional guidance and consultancy.

In case you need any information or clarification regarding private limited company registration in India, you may contact EzyBiz India at www.ezybizindia.in and call us at +919899217778

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