Frequently Asked Questions on private limited company

FAQs - PRIVATE LIMITED COMPANY

Q. What is authorized capital and paid-up capital?

A. Authorized capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid-up capital is the amount of shares issued by the company to shareholders. Authorized capital can be increased any time after incorporation to issue additional shares to the shareholders.


Q. What is limited liability protection?
A. Limited liability is the status of being legally responsible only for a limited amount of debts of a company. Unlike proprietorships and partnerships, the liability of the shareholders with respect to the company’s liabilities is limited.


Q. How do I open a current account?
A. Once the company is incorporated, a current account needs to be opened in the name of the company for transactions. Your advisor will guide you through the process of choosing the bank that you want to open the account with and get the documents like certificate of incorporation, Memorandum and Articles of Association, board resolution, copy of PAN allotment letter and utility bill.


Q. Can NRIs, foreign national or foreign entities register a company in India?
A. Yes, NRIs, foreign nationals and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, incorporation rules in India require for one Indian national to mandatorily be a part of the
company on the Board of Directors.


Q. How do I check the availability of names for my company?

A. You can use Vyapaar Pundit's Company Name Availability Search tab to search for available names in India. It is important to note that Vyapaar Pundit would just provide available choices, based on identical names already registered.

Q. Is GST registration mandatory at this stage?
A. GST registration is mandatory for certain businesses. Companies dealing with e-commerce operations or any other inter-state activity and companies with turnover of more than Rs. 40 Lakhs are required to obtain the same. GST registration takes just 3-5 working days with Vyapaar Pundit.

Q. What are the compliances of a Private Limited Company?

A. A company is required to maintain certain compliances once it is incorporated. An auditor needs to be appointed within 30 days and income tax filing and annual return filing need to be done every year. Apart from these, mandatory compliances like ‘Commencement of Business’ forms and DIN eKYC also need to be done.


Q. When is the statutory auditor to be appointed?
A. The Board of Directors is required to appoint a practicing Chartered Accountant within 30 days of incorporating a Private Limited company.


Q. Which form is to be filed for the ITR filing of Private Limited company?

A. The Private Limited companies that are registered in India have to file ITR returns each year in Form ITR 6.


Q. Which form is to be filed for filing the annual returns of a company?

A. The companies registered in India are required to file the MCA annual return each year in forms AOC 4 and MGT 7.


Q. How many members are required to start a Private Limited company?

A. Minimum 2 and maximum 200 members can start a Private Limited company.


Q. How can ownership be transferred?
A. The ownership of a Private Limited company can be transferred by the way of shares.

Q. How are the companies taxed? What are the tax rates?

A. Private Limited companies are taxed at 30% plus the surcharge and cess as applicable.


Q. Who governs and controls the functioning of a Private Limited company?
A. The MCA and Companies Act, 2013, controls the functioning of a Private Limited company.

Q. What are the benefits of registering a Private Limited company?

A. There are various benefits of registering a Private Limited company like limited liability, access to funding, borrowing capacity, greater capacity, easy exit and scope of multiple opportunities.