{"id":31255,"date":"2021-05-29T14:07:45","date_gmt":"2021-05-29T08:37:45","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=31255"},"modified":"2024-05-13T22:27:57","modified_gmt":"2024-05-13T16:57:57","slug":"benefits-of-private-limited","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/benefits-of-private-limited\/","title":{"rendered":"Know why a private limited company is the best business structure for start-ups in India"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Being transformed into a successful business entity is challenging even for start-ups with a bright idea. Start-ups, in general, need to cater for plenty of parameters before initiating business activities. Choosing the right structure is indeed one of the most important decisions for start-ups in their business journey. In this write-up, you will come to know benefits of private limited and why a it is the best business structure for <strong>start-ups in India<\/strong>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/benefits-of-private-limited\/#An_Overview_on_a_Private_Limited_Company\" >An Overview on a Private Limited Company&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/benefits-of-private-limited\/#Reasons_why_the_private_limited_company_is_the_best_business_structure_for_start-ups\" >Reasons why the private limited company&nbsp;is the best business structure for start-ups<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/benefits-of-private-limited\/#Process_of_the_private_company_registration_process\" >Process of the private company registration process&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/benefits-of-private-limited\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Overview_on_a_Private_Limited_Company\"><\/span>An Overview on a Private Limited Company&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A <strong>Private Limited Company<\/strong> is established lawfully with limited liability or legal protection for its shareholder, but that imposes limitations on its ownership.&nbsp;<\/p>\n\n\n\n<p>It is a form is a company that\nis privately held for small businesses. The liability of the members of such an\nentity is limited to the share\u2019s quantity held by them. The share of these\ncompanies is accessible to the public domain.&nbsp;<\/p>\n\n\n\n<p>A private limited company is\narguably one of the popular forms of business registration in India. Only two\npeople are required to trigger its registration process. Limited liability on\nshareholders, ability to procure equity funds, the autonomous legal entity makes\nit the best business structure for start-ups and other business\nstructures.&nbsp;<\/p>\n\n\n\n<ul>\n<li>Minimum Requirement to set up Private Limited Company in India<\/li>\n\n\n\n<li>A minimum number of&nbsp;two Directors&nbsp;having a permissible age limit.&nbsp;&nbsp;<\/li>\n\n\n\n<li>One of the Directors has to be an&nbsp;Indian Citizen&nbsp;&amp;&nbsp;Indian Resident.<\/li>\n\n\n\n<li>The other Director(s) can be from a non-Indian territory.&nbsp;<\/li>\n\n\n\n<li>The presence of two shareholders is a must for setting up such a company.&nbsp;<\/li>\n\n\n\n<li>The shareholders can be an artificial legal entity or a natural person.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/know-about-private-limited-company-india\/\">All you need to Know about Private Limited Company <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_why_the_private_limited_company_is_the_best_business_structure_for_start-ups\"><\/span>Reasons why the private limited company&nbsp;is the best business structure for start-ups<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are the reasons the justified the fact that <a href=\"https:\/\/corpbiz.io\/company-registration\">registering private limited company<\/a> is the beneficial business structure for start-ups in India<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No Minimum Capital<\/h3>\n\n\n\n<p>No minimum capital is needed\nto set up a Private Limited Company. Such an entity is registerable with a sum\nof Rs 10,000 as total authorized share capital.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Separate Legal Entity<\/h3>\n\n\n\n<p>A Private Limited Company is\nan independent legal identity from the law\u2019s viewpoint. It means that the\nassets and liabilities of such a business are not similar to the assets &amp;\nliabilities of the Directors. Both are distinctive in this regard. Such an\nentity separates ownership &amp; management, and therefore, managers are accountable\nfor the company\u2019s success and are also answerable.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Limited Liability<\/h3>\n\n\n\n<p>Limited liability makes these\nentities damage-proof in terms of members\u2019 protection. Meaning \u2013 in case of\nfinancial crisis incurred due to whatsoever reasons, the members\u2019 assets will\nremain secure while paying up the debts. Fencing of liability helps members\nwork without wondering about future damages. In case of debt, the member would\nbe only liable to pay their part, i.e. their shareholding. This is probably why\nprivately held entities are considered the best business structure for\nstart-ups in India.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Fund Raising<\/h3>\n\n\n\n<p>Minimal exposure to risk makes\nthese entities less prone to limited funding. That means their chances of\nprocuring funds from Venture Capitalists or Angel investors are brighter than\nother business forms.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Free &amp; Easy transfer of shares<\/h3>\n\n\n\n<p>The company\u2019s shares (limited\nby shares) are transferable to any other person by the shareholder. The\ntransfer is less tedious than the transfer of an interest in a business run as\na partnership or proprietorship. Filling &amp; signing a share transfer form\n&amp; handing over the share\u2019s buyer along with the share certificate can\nseamlessly transfer shares.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Uninterrupted existence<\/h3>\n\n\n\n<p>A Private Limited Company\nmitigates the threat of being dissolved unexpectedly due to the demise or\ndeparture of any member. Such entities excel on the concept of Perpetual\nSuccession\u2019 which keep them alive under the circumstances above. That means\ntheir existence remains unaffected by cases other than legal dissolution or\nwinding up.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FDI Allowed<\/h3>\n\n\n\n<p>A low-risk profile allows the\nprivate limited company to attract 100% Foreign Direct Investment. The overseas\ninvestors can make direct funding to these entities to reap more profit. The\nseamless flow of overseas funding makes the private limited company the best\nbusiness structure for start-ups in India.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_the_private_company_registration_process\"><\/span>Process of the private company registration process&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>After the inculcation of the SPICe+ webform, the incorporation of the private limited company has become easier than ever. All applicants need to visit the official website of the <em><strong>Ministry of Corporate Affairs<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Ministry_of_Corporate_Affairs\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> and fill this form accordingly to register their firm.&nbsp;<\/p>\n\n\n\n<p>SPICe+ is an online form that\nclubbed everything required for the incorporation process. This form is divided\ninto two parts, i.e. Part A and Part B.&nbsp;<\/p>\n\n\n\n<p>PART A helps the applicant to\napply for a name reservation. Once the applicant filed the required details and\nthe list of the proposed name, the portal conducts a real-time inspection with\nits database for name availability.&nbsp;<\/p>\n\n\n\n<p>The second part of the <a href=\"https:\/\/corpbiz.io\/learning\/spice-plus-form-everything-you-need-to-know\/\">SPICe+ form<\/a>, i.e. Part A, allows user to drop a request for the following services given below to complete the incorporation process.\u00a0<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Process-of-the-private-company-registration-process.png\" alt=\"Process of the private company registration process \" class=\"wp-image-31294\" width=\"509\" height=\"570\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Process-of-the-private-company-registration-process.png 874w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Process-of-the-private-company-registration-process-268x300.png 268w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Process-of-the-private-company-registration-process-768x860.png 768w\" sizes=\"(max-width: 509px) 100vw, 509px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Starting a business journey requires start-ups to make a lot of informed decisions. A lot of detailing needs to be outlined before commencing the proposed operations. These entities must pay extra attention when it comes to selecting the proper business structure. It is clear from the above that a private limited company has beefed with plenty of benefits, making it the best business structure for start-ups.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/benefits-of-startup-india-registration-in-india\/\">Benefits of Startup India Registration in India <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Being transformed into a successful business entity is challenging even for start-ups with a bright idea. Start-ups, in general, need to cater for plenty of parameters before initiating business activities. Choosing the right structure is indeed one of the most important decisions for start-ups in their business journey. In this write-up, you will come to [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":31293,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[154],"tags":[1779],"acf":{"service_id":"1"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6608,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31255"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=31255"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31255\/revisions"}],"predecessor-version":[{"id":64128,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31255\/revisions\/64128"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/31293"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=31255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=31255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=31255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}