(A) When to incorporate a Pvt. Ltd. company?

Our suggestions:

These are the most common reasons when you should incorporate your business as a Private Limited Company –

1. If you are a startup and are planning to raise funds for your business:
   If you have formulated a startup idea and have executed it to a certain extent so that it can be implemented in open market to generate revenue, and for going into production or market execution or product development you need funds from outside, then forming a Pvt. Ltd. Company is the best way to do this!

2. You have an already established business and are planning to expand:
   When you are already running a business in any other form, now you want to expand and your turnover could be high. For providing a curtain of limited liability against such high turnover we suggest you to incorporate your business as a company. As with this your liability as a member is limited to the contribution made by you by way of equity shares.

(B) Benefits of incorporating as a private limited company:

• Helps in raising capital: As discussed above, incorporating your business as a PLC facilitates to raise funding from venture capital firms or angel investors for your business/startup idea.

• Limited Liability: It provides a shield of limited liability. In case of default, a member is liable to pay company’s liability only upto the contribution made by him. This means a member is not personally liable. His personal assets are not affected by company’s liabilities.

• Separate Legal Entity: A private limited company provides you with a separate legal entity, a corporate identity, different from its owners. A company can do business & enter into any contract/agreement in its own name.

• Increase Credibility: Every company is registered with the Registrar of Companies under the Companies Act 2013, hence each and every details of the company, its directors are verified before granting registration, which improves credibility and trustworthiness in business.

• Continued Existence: A company having a separate legal entity different from its owners, has a continued existence undisturbed by death or cessation of its owners or members. A company continues its existence irrespective of the change in membership until it is legally dissolved.

(C) Process for Incorporating a Pvt. Ltd. Company:

• Deciding the Name of the Company;
• Deciding the objects of the company i.e. what business shall the company carry after incorporation and the activities to be carried out by the company;
• Applying for Name Reservation;
• Applying for Digital Signature Certificates of Directors
• Drafting Incorporation Documents (I.e. Memorandum & Articles of Association);
• Application for Incorporation in SPICE+ form;
• Application for PAN, TAN, EPFO & ESI;
• Application for GST (if required);
• Receipt of the Certificate of Incorporation from the Registrar upon approval;
• Receipt of E-PAN, TAN, EPFO & ESI Registration;
• Receipt of GST Registration (If Applied).