We are in the era of startups and businesses. Every now and then new businesses get established in the country. The very first step towards starting any kind of business is business registration. Business registration can be done in many ways like sole proprietorship firm registration, partnership firm registration, LLPs, OPCs etc., but the most popular choice of entrepreneurs is private limited company registration. This is because of the benefits or we can say advantages of this entity. In order to start this entity one must be aware about the amount of the capital required to start a private limited company. The present blog is fully dedicated to the discussion regarding how much capital is required to start a private limited company in India. Hence if you are on the way to start such a company must go through the current blog till its last line.
What is a Private Limited Company?
An entity which has been registered under the Companies Act of 2013 with at least Rs. 1 lakh paid capital with minimum one director is called a private limited company. These companies can have a maximum of 200 directors. They have many advantages like perpetual succession, separate legal entity, status of artificial legal person, limited liability etc. such types of entities are having high credibility as well as reliability in the market due to which they are number one choice of the business owners.
In order to get registration of these entities proper procedure needs to be fulfilled through the Ministry of Corporate Affairs. Once such companies get registered they are recognized. They are transparent due to which customers trust them a lot. It is one of the best choices for the midsized as well as big businesses. Handsome amount of capital is required to start a private limited company, hence you must be aware about the entire things regarding the capital which has been discussed below.
Total Capital is Required to Start a Private Limited Company
As a business owner if you are thinking about starting your business by registering it as a private limited company you must be aware about what the total capital is required to start a private limited company. Without figuring out the same, if you start a private limited company you might be disappointed, because a good amount of capital is required to start a private limited company. It is just not limited to the paid up capital. Many people have this myth that in order to start a private limited company one needs just Rs. 1 lakh. That is not the truth because except paid up capital there are many other things where your money is going to be invested. Some of the key aspect of the total capital is required to start a private limited company are given below:
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Particulars |
Details of Capital |
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Minimum Paid Up Capital |
A minimum amount of paid-up capital requirement is Rs. 1 lakh is required for the registration of a Private Limited Company in India. It is not possible to incorporate a Pvt. Ltd. Company and then ignore this sum. It may be recruited since it is the bare minimum, but the decision ultimately rests with the business owner. Never forget that an increase in your paid-up capital could have an impact on stamp duty as well. |
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Fees or Stamp Duty |
Here, "registration fees" refers to the company's stamp duty. It goes in thousands for certain states, but just in hundreds for others. This can be found out using the Ministry of Corporate Affairs portal based on one's paid-up capital and business situation. It is impossible to provide a consistent amount of stamp duty for the company registration due to the variability of stamp duties. |
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Amount Required for DSCs |
Certificates of Digital Signature are required to finish the incorporation process for any type of organization. The Private Limited Company is in the same boat. Certificates with digital signatures are created based on the number of directors. It will be necessary to obtain two Digital Signature Certificates when starting a corporation with two directors. One Digital Signature Certificate typically costs 2000 rupees. It will be Rs. 4,000 if there are two directors, and so on. |
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Professional Fees |
It is advised to seek the assistance of an expert because the registration process for such a corporation involves several legal and technical requirements. You must pay a professional for their consultation if you are seeking guidance from them. This expert could be an advocate, chartered accountant, or company secretary. Once more, consultation fees may differ amongst professionals. Skilled experts could charge a little more. Professional fees for this kind of company incorporation typically range from Rs. 5000 to Rs. 15000. |
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Other Miscellaneous Expenses |
The fees listed above are not the only expenses associated with forming a private limited company. Numerous additional expenses are encompassed in the price of forming a Private Limited Company in India. These adjustments cover things like the business's expenses, bookkeeping and accounting, operating costs, etc. |
Conclusion
Good amount of capital is required to start a private limited company with respect to various financial aspects. While the minimum paid-up capital is set at Rs. 1 lakh, business owners should be aware that additional expenses are also involved which increases the total amount of capital is required to start a private limited company. These include fees for Digital Signature Certificates, stamp duty, professional consultation, and various miscellaneous expenses. It's crucial for entrepreneurs to plan and budget accordingly, factoring in all necessary components of the total capital required. Understanding these financial aspects ensures a smoother and more informed process when initiating the registration of a private limited company, a popular and credible choice for businesses in India.
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