{"id":13800,"date":"2018-08-24T13:00:13","date_gmt":"2018-08-24T13:00:13","guid":{"rendered":"https:\/\/www.legalraasta.com\/blog\/?p=13800"},"modified":"2026-04-08T10:49:24","modified_gmt":"2026-04-08T05:19:24","slug":"small-company-in-india","status":"publish","type":"post","link":"https:\/\/www.legalraasta.com\/blog\/small-company-in-india\/","title":{"rendered":"What is a Small Company"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 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\" style=\"cursor:inherit\">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 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.legalraasta.com\/blog\/small-company-in-india\/#Overview\" title=\"Overview\">Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.legalraasta.com\/blog\/small-company-in-india\/#What_are_the_characteristics_of_a_Small_Company\" title=\"What are the characteristics\u00a0of a Small Company\">What are the characteristics\u00a0of a Small Company<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.legalraasta.com\/blog\/small-company-in-india\/#What_are_the_advantages\" title=\"What are the advantages ?\">What are the advantages ?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Overview\"><\/span><em>Overview<\/em><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/small-business-ideas-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Small business<\/a> is the<a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\"> private limited companies<\/a>,<a href=\"https:\/\/www.legalraasta.com\/partnership-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\"> partnerships<\/a> or <a href=\"https:\/\/www.legalraasta.com\/proprietorship-firm-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">sole proprietorships<\/a> having few employees. It has less annual revenue as compared to the regular- sized companies. The <a href=\"https:\/\/www.legalraasta.com\/blog\/importance-small-businesses-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">importance of Small businesses\u00a0<\/a>is to contribute in the process of generating profit to boost up employment. Hence, it is the backbone of the Economy. The concept of small companies is given by the companies act 2013. The classification of small companies has a long route to enhance the small business in India. This article is based on the elaboration of a small business structure and its characteristics with advantages:<\/p>\n<p>According to the <a href=\"https:\/\/www.legalraasta.com\/companies-act-2013\/\" target=\"_blank\" rel=\"noopener noreferrer\">companies act 2013<\/a> under section 2(85), a small company is:<\/p>\n<ul>\n<li>other than a public one who is having paid-up capital of not more than Rs.50,00,000 or such higher amount as may be prescribed which shall not be more than five crore rupees.<\/li>\n<li>Other than a public one whose turnover is as its last profit and loss account not more than Rs. 2 crore or such higher amount as may be prescribed which shall not be more than RS. 20 crore.<\/li>\n<\/ul>\n<p>Also written that it shall not be applicable in the case of a Holding company, a <a href=\"https:\/\/www.legalraasta.com\/blog\/rules-regulations-section-8-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">company registered under section 8<\/a>, company or body corporate governed by any special Act.<\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"What_are_the_characteristics_of_a_Small_Company\"><\/span><strong><em>What are the characteristics\u00a0of a Small Company<\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There are certain characteristics of it are given below:<\/p>\n<ol>\n<li><em><strong>Low profitability and revenue<\/strong><\/em>: Generally, a small company has less revenue as compared to the large one. It is depending on the type of business how much it is able to generate revenue. But lower revenue does not consider as lower profitability.<\/li>\n<li><em><strong>Fewer Employees<\/strong><\/em>: it basically onboard a small team of employees than others. Sometimes, small companies are handled by a single person or a single team.<\/li>\n<li><em><strong>Smaller Market Area<\/strong><\/em>: small companies are made to serve the smaller sections of the society or community like convenience\u00a0shop in a rural township. So, they have a small area for operating business activities.<\/li>\n<li><em><strong>Sole proprietorship\/partnership and taxes<\/strong><\/em>: the corporate structure of working does not suit small-scale\u00a0working organizations. Despite, small business has the priority to establish sole proprietorships, partnerships and limited liability companies. It provides them the strong sense of managerial control to the office owners with minimum\u00a0hassle and expenditure of <a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">company registration.<\/a> It&#8217;s owner is liable to report business income and expenses on their personal tax returns. As small companies do not file their own taxes.<\/li>\n<li><em><strong>Fewer locations<\/strong><\/em>:\u00a0 it is found in a limited area instead of several branches. The hands of the small scale companies are not grasped by other countries and states. Its sales are just confined to a single area. Besides, it is much easier and feasible if it is controlled by the home itself.<\/li>\n<\/ol>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"What_are_the_advantages\"><\/span><strong>What are the advantages ?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Every business structure has some merits and demerits of its own. It too has some advantages under companies act 2013 which are given below:<\/p>\n<ol>\n<li><em><strong>Board Meetings<\/strong><\/em>: Two meetings in a financial is just sufficient for a it. Any <a href=\"https:\/\/www.legalraasta.com\/advantages-of-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\">private limited company<\/a> which is not considered as the small one shall conduct four board meetings in a financial year.<\/li>\n<li><em><strong>Annual Return<\/strong><\/em>: The<a href=\"https:\/\/www.legalraasta.com\/business-income-return\/\" target=\"_blank\" rel=\"noopener noreferrer\"> annual return filing<\/a> can be signed by a CS or a director of the small company. Any private limited company which is not considered as a small company shall sign its annual return filing by a director and a company secretary both.<\/li>\n<li><em><strong>Cash flow statement<\/strong><\/em>: Any <a href=\"https:\/\/www.legalraasta.com\/blog\/much-cost-start-run-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\">private limited company<\/a> comes under the category of a small company shall not maintain a cash flow statement as a part of the financial statement. On the contrary, any private limited one does not come under the category of it then it is mandatory to prepare a Cash flow statement as a part of the financial statement.<\/li>\n<li>\u00a0<em><strong>Auditors Rotation<\/strong><\/em>: Any private limited company falls in a small company&#8217;s category do not require to rotate auditors. But private limited company not classified as it, must rotate auditors every 5 to 10 years as prescribed under the companies act 2013.<\/li>\n<\/ol>\n<p>For further more information regarding <a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">company registration<\/a>, <a href=\"https:\/\/www.legalraasta.com\/blog\/compliances-of-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\">compliances of private limited company<\/a> you can visit our website: <a href=\"https:\/\/www.legalraasta.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Legal Raasta<\/a><\/p>\n<p>Give us a call at 8750048585 and send your query on Email: contact@legalraasta.com<\/p>\n<blockquote>\n<p>Related Article:<\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/audit-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Audit Requirements for Private Limited Company&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:573,&quot;3&quot;:[null,0],&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;12&quot;:0}\">Audit Requirements for Private Limited Company<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/start-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;How to Start or Run a Private Limited Company.&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403901,&quot;3&quot;:[null,0],&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">How to Start or Run a Private Limited Company.<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/registration-licenses-required-starting-e-commerce-business\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Registration and Licenses Required for Starting an E-commerce Business&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403901,&quot;3&quot;:[null,0],&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">Registration and Licenses Required for Starting an E-commerce Business<\/span><\/a><\/p>\n<p>&nbsp;<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Overview Small business is the private limited companies, partnerships or sole proprietorships having few employees. It has less annual revenue as compared to the regular- sized companies. The importance of Small businesses\u00a0is to contribute in the process of generating profit to boost up employment. Hence, it is the backbone of the Economy. The concept of small [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":13810,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[556],"tags":[236,261,262,263,260,259],"class_list":["post-13800","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company-articles","tag-advantages-of-small-company","tag-characterstics-of-small-company","tag-definition-of-small-company","tag-section-2-85","tag-small-companies","tag-small-company"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is a Small Company in India | Online Knowledge | Legal Raasta |<\/title>\n<meta name=\"description\" content=\"The concept of a small company is given by the companies act 2013. 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