Private Limited Companies are the most common form of entrepreneurial venture in India, with advantages including limited liability, ease in raising funds, separate legal identity, and others. However, the real cost of registering a Pvt. Ltd. company goes on to become an essential constituent of overall financial planning. There are several components in registration cost, including government fees, professional fees, and extra depending on the company structure and state of incorporation. This report delves deeper into all these costs for future business owners to move easily in the registration process.
What is a Private Limited Company?
A Pvt. Ltd. is perhaps one of the most favored structures in India for entrepreneurs starting businesses and small, medium enterprises. It has many good qualities, with enough flexibility, limited liability, and much credibility. There are a few basic requirements which the applicant must meet before registering a Private Limited Company:
- Minimum 2 Shareholders
- Minimum 2 Directors and maximum 15 Directors.
- Same Person to be Director and Shareholders
- DIN of Director : The DIN is compulsory for every Director
- Digital Signature Certificate
- At least one director should be a resident and citizen of India.
Total Cost of Registering a Private Limited Company in India
The process of Private Limited Company Registration includes various steps. To complete all these steps there is costing which the owner needs to fulfill. One cannot register such an entity without spending the cost which is necessary for the registration of such an entity. There will be different costing for different states, hence to provide you with a universal amount is a little difficult. But for your referral here we are going to discuss the approximate costing of registration Private Limited Company.
Fees for Name Reservation Using RUN
- Cost: ₹1,000 per submission.
- This fee allows the applicant to propose two names in a single application.
- If both proposed names are rejected, a new application and additional payment will be required.
Key Considerations for Name Registration
- Unique Name Requirement: The name must be unique and not identical nor similar to a prior company or trademark. Names violating the rules set by the Companies Act, 2013, may be rejected.
- Validity of Reserved Name: Once approved, the reserved name is valid for 20 days (for new companies) or 60 days (for existing companies undergoing a name change).
- Professional Help: Many businesses hire professionals to ensure the name complies with MCA guidelines, which may incur an additional cost of ₹1,000–₹5,000.
Government Fees for Private Limited Company Registration
The government fees depend on the authorized capital of the company and are outlined by the Ministry of Corporate Affairs (MCA). The structure is as follows:
- Authorized Capital up to ₹15,00,000: No additional fees.
- Authorized Capital above ₹15,00,000: Fees start at ₹500 and increase progressively with higher capital.
- MCA charges for filing the SPICe+ form for company incorporation.
- Stamp duty is typically calculated on the authorized share capital of the company.
- Example for Delhi, approx. ₹200 for MOA and ₹200 for AOA and for Maharashtra rates are higher compared to other states.
Professional Fees for Pvt. Ltd. Company Registration
Professional fees are charged by Chartered Accountants , Company Secretaries , or legal consultants for the following services:
- Company name reservation on MCA.
- Preparation and filing of SPICe+ forms.
- Drafting MOA and AOA.
- Statutory compliance.
Cost Range: ₹5,000 to ₹25,000, depending on the complexity and consultancy chosen.
Costing for Preparation of DSCs
A Digital Signature Certificate is mandatory for directors and subscribers. DSCs are issued by government-approved certifying authorities.
- Validity: Usually issued for 2 years.
- Cost per DSC: ₹1,000 to ₹1,500 (varies by certifying authority).
- Each director needs a DSC.
Minimum Paid UP Capital
There may be no minimum paid-up capital for registering a personal restricted employer. However, groups normally start with a nominal quantity like ₹1,00,000 or higher, relying on commercial enterprise requirements.
Minimum Authorized Capital
The minimum legal capital for a personal restrained organisation is ₹1,00,000. This does not contain any upfront charge; it merely indicates the most quantity of proportion capital an enterprise is allowed. MCA charges based totally on the legal capital at the time of incorporation ₹1,00,000 authorized capital: No additional fee. higher legal capital entails incremental costs.
Overdue Charges for the Delay in Submitting Forms
Effective from 1st July 2022, additional and higher fees will apply in cases of delayed filing of certain forms for private limited company registration. The fee structure is as follows:
- For a delay of up to 15 days (applicable for Sections 139 and 157), an additional fee equivalent to one time the normal fee will be charged, with no higher additional fee applicable. For delays exceeding 15 days but up to 30 days (under Sections 139 and 157), and for delays up to 30 days in other forms, the additional fee will be twice the normal fee, while the higher additional fee will be three times the normal fee.
- If the delay extends beyond 30 days but up to 60 days, the additional fee will be four times the normal fee, and the higher additional fee will be six times the normal fee. For delays beyond 60 days but up to 90 days, the additional fee will increase to six times the normal fee, while the higher additional fee will be nine times the normal fee.
- Delays exceeding 90 days but up to 180 days will incur an additional fee of ten times the normal fee and a higher additional fee of fifteen times the normal fee. For delays beyond 180 days, the additional fee will be twelve times the normal fee, and the higher additional fee will be eighteen times the normal fee.
Private Limited Company Registration Procedure
Private Limited Company registration procedure is as under:
Approval Of Name Of Company
- You have to apply to the MCA or Ministry of Corporate Affairs, with an application for reserving the name of your company.
- Propose 1 or 2 names along with your business objectives.
- The MCA will approve your application within 5 working days, unless it is on the grounds of similarity and rejection for other reasons. In this case, you can send another 1 or 2 names.
Digital Signature for Directors
- You would need to obtain a digital signature for every director in your company because the MCA doesn't accept a physical signature.
- A digital signature certificate issued by a certified authority in India requires an identity proof of the applicant along with completion of video KYC.
- In the case of foreign national, you have to get your passport and other documents apostilled from your local embassy.
Submission of the incorporation application
- Once you receive the digital signature, file the incorporation application in the SPICe Form along with all the attachments relevant to it to the MCA.
- You also submit the Memorandum of Association of your company and articles of Association of your company which define the scope and rules of your company.
- The MCA will deliver to you an incorporation certificate accompanied by the PAN of your company within 5 working days if your application is complete and acceptable.
Required Documents for the Pvt Ltd Company Registration
Here is the list of documents required for Private Limited Company registration in India:
- Passport (Non-resident Indian or Foreign National)
- PAN Card
- Aadhar Card
- Driving License or Voter ID
- Passport-size photos of all directors
- Recent Bank statements
- Recent Electricity bill or any utility bill
- Rent agreement if the office is rented
- NOC from the owner of the property
Conclusion
The incorporation of a Private Limited Company in India is structured, and the price depends on the authorized capital of the company, the place of its incorporation, and professional guidance. Professional fees vary significantly, but government fees are standardized. These costs have to be taken into consideration during budgeting and accounted for in the long term before forming a Pvt. Ltd. company, which in turn will benefit entrepreneurs concerning credibility, tax advantages, and easy expansion. Thus, the clarity of expenditure helps in smooth registration processes and lays down a basis for a successful business venture.
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