{"id":14217,"date":"2018-09-05T13:23:33","date_gmt":"2018-09-05T13:23:33","guid":{"rendered":"https:\/\/www.legalraasta.com\/blog\/?p=14217"},"modified":"2026-04-07T17:17:30","modified_gmt":"2026-04-07T11:47:30","slug":"private-limited-companies","status":"publish","type":"post","link":"https:\/\/www.legalraasta.com\/blog\/private-limited-companies\/","title":{"rendered":"Private Limited Companies: A path to success for startups"},"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\/private-limited-companies\/#The_Exciting_World_of_Startups\" title=\"The Exciting World of Startups\">The Exciting World of Startups<\/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\/private-limited-companies\/#Private_Limited_Companies_are_startup_friendly\" title=\"Private Limited Companies are startup friendly\">Private Limited Companies are startup friendly<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.legalraasta.com\/blog\/private-limited-companies\/#Incorporating_a_Private_Limited_Company\" title=\"Incorporating a Private Limited Company\">Incorporating a Private Limited Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.legalraasta.com\/blog\/private-limited-companies\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"The_Exciting_World_of_Startups\"><\/span><strong>The Exciting World of Startups<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Startups can be a place of high intensity. The chaotic and intense workload, being on the cusp of innovation and the stress of getting and pleasing clients. It can be a challenging task to deal with all the pressure that comes with startups. This tension and pressure can be relieved by choosing the right path and foundation for the company.\u00a0 This will ensure the company goes in the right direction. In this article, we&#8217;re going to look at choosing to go <a href=\"https:\/\/www.legalraasta.com\/private-limited-company\/\"><span style=\"color: #0000ff;\">Private limited Company<\/span><\/a> with your startups and how private Limited companies are startup friendly.<\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Private_Limited_Companies_are_startup_friendly\"><\/span><strong>Private Limited Companies are startup friendly<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">Great! You have an idea for an innovative solution to society&#8217;s problem or you have automated a manual procedure this does not ensure success or any rewards for startups as such. What does bring success to startups is steering it gently and carefully in the right direction and complying with market demands. One step towards defining the direction of the company is choosing what type of company you are going to form. Companies are of various types and selecting the right model for your startup is as important as any other procedure.<\/p>\n<p style=\"text-align: justify;\">So what is a company? we must ask first! In India, according to the <a href=\"https:\/\/www.legalraasta.com\/companies-act-2013\/\"><span style=\"color: #0000ff;\">Companies Act, 2013<\/span><\/a>, A company is an association of individuals who register their company under the regulations of the act and agree to comply with regulations set for a company<\/p>\n<p>\u00a0Let&#8217;s look at various Types of companies you can form in India.<\/p>\n<ul>\n<li>Sole Proprietorship &#8211; Suitable for small traders<\/li>\n<li><span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.legalraasta.com\/llp\/\">Limited Liability Partnership<\/a>(<\/span>LLP) &#8211; Suitable for firms wanting to inculcate a partnership structure<\/li>\n<li><span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.legalraasta.com\/one-person-company\/\" target=\"_blank\" rel=\"noopener\">One Person Company<\/a>: <\/span>Individuals Starting their own company.<\/li>\n<li><a href=\"https:\/\/www.legalraasta.com\/private-limited-company\/\" target=\"_blank\" rel=\"noopener\"><span style=\"color: #0000ff;\">Private Limited Company<\/span>&#8211;<\/a> Ideal for startups, firms wanting to go public, inviting VCs and FDI and therefore, Good for growth<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\"><span style=\"color: #0000ff;\">Private Limited Company registration<\/span><\/a> has a lot of merits for startups. For starters, Private Limited Companies have a greater applicability in the market and are a large community in the country with over 1 crore Pvt Ltd Companies in operation in the country. Private Limited companies also have faster processing of legal procedures.<\/p>\n<p>In addition to this, the Private Limited Companies have limited liability. Limited Liability means that the risks to the personal assets of a founder\/ director are minimized in this company structure.<\/p>\n<p>Here&#8217;s listing down some of the advantages of Private Limited Companies over <a href=\"https:\/\/www.legalraasta.com\/llp-registration\/\"><span style=\"color: #0000ff;\">LLP Registration<\/span><\/a>.<\/p>\n<ul>\n<li>Private Limited Companies define a clear distinction between shareholders and directors of a company whereas LLPs provide no clarification on these roles.<\/li>\n<li>\u00a0The potential for raising venture capital and offering options for attracting great talent by offering ESOPs (Employee Stock Option Plans) is available for Private Limited Companies. However, no such option is available for LLPs<\/li>\n<li>The time for the incorporation process is generally faster for Private Limited Company(7-10 days) compared to LLPs(15-20 days)<\/li>\n<li>LLPs also have a higher fine rate for late filing of documents as compared to Private Limited Companies.<\/li>\n<li style=\"text-align: justify;\">Private Limited Companies have the provision for perpetual succession that is company continues to function as normal after death\/ leaving of a director. LLP, on the other hand, has no provision of perpetual succession. Director(s) have to dissolve the LLP if any of the said events occur. PLCs have Flexibility on ownership and sharing of ownership.<\/li>\n<li>LLPs cannot retain profit in the same way as a company limited by shares. LLPs cannot issue shares at all and therefore, growth and expansion scope is very limited whereas inviting Private Limited Companies can raise humungous amounts of capital for their further growth.<\/li>\n<li style=\"text-align: justify;\">A Private Limited Company(PLC) has provisions for various tax deductions.LLPs will have to pay Income tax whereas private limited companies have to pay corporation tax. There are many provisions in place for tax deductions on corporation tax.<\/li>\n<li style=\"text-align: justify;\">Even though PLCs have higher compliances and audit procedures these ensure the company stays in compliance with the regulations. LLPs if they have a higher than 40 lakh Rupees turnover, are subject to the same compliance requirements. Hence, constant auditing proves beneficial in this situation. Prepares the PLC for further more intensive auditing procedures.<\/li>\n<li>Exemptions: The Private Limited Companies are entitled to many exemptions for compliances as well as other operations as per the Companies Act, 2013.\u00a0 Read about: <span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/www.legalraasta.com\/blog\/exemptions-private-limited\/\">Exemptions Private Limited Companies<\/a><\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Incorporating_a_Private_Limited_Company\"><\/span><strong>Incorporating a Private Limited Company<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Ministry of Corporate Affairs has taken drastic steps to ensure faster processing of company registration.\u00a0 Recently the government introduced the measure of <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.legalraasta.com\/blog\/one-day-company-incorporation\/\">One Day Company Incorporation<\/a>.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>Let&#8217;s list down the basic steps of incorporating a private limited company.<\/p>\n<ul>\n<li>Obtain DSC(Digital Signature Certificate)<\/li>\n<li>Apply for name Approval of the company<\/li>\n<li>File e-form INC-32 (SPICe) along with e-MoA(INC-33) and e-AoA(INC-34)<\/li>\n<\/ul>\n<p>The SPICe integrated e-form now has provision for the following:<\/p>\n<ul>\n<li>Obtaining DIN(Director Identification Number)<\/li>\n<li>Name Reservation<\/li>\n<li>PAN and TAN number<\/li>\n<li>Incorporation Certificate<\/li>\n<\/ul>\n<p>You can look at <a href=\"https:\/\/www.legalraasta.com\/blog\/faqs-private-limited-company-registration\/\"><span style=\"color: #0000ff;\">FAQs Private Limited Companies<\/span><\/a> to get an in-depth knowledge of registering a private limited company in India.<\/p>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In conclusion, we are trying to push through the notion that a startup in its early phase is almost always in a fragile state. It becomes vital for companies to pick and choose what type of company they are going to be in the future. This article gives a slight hint that going with <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener\">Private Limited Company Registration<\/a><\/span> might the most suitable for startups and is, therefore, one of the key business vehicles to ensure long-term success.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Exciting World of Startups Startups can be a place of high intensity. The chaotic and intense workload, being on the cusp of innovation and the stress of getting and pleasing clients. It can be a challenging task to deal with all the pressure that comes with startups. This tension and pressure can be relieved by [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":14221,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[555],"tags":[45,353,387,71],"class_list":["post-14217","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-limited","tag-private-limited-company","tag-private-limited-company-registration","tag-startup-friendlt-private-limited-company","tag-startups"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Private Limited Companies : A path to success for startups<\/title>\n<meta name=\"description\" content=\"Startups can be challenging and exciting at the same time. 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Trusted across India, LegalRaasta makes legal and financial compliance simple, quick, and affordable.","url":"https:\/\/www.legalraasta.com\/blog\/author\/adarshseoexecutive\/"}]}},"_links":{"self":[{"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/posts\/14217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/comments?post=14217"}],"version-history":[{"count":6,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/posts\/14217\/revisions"}],"predecessor-version":[{"id":15426,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/posts\/14217\/revisions\/15426"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/media\/14221"}],"wp:attachment":[{"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/media?parent=14217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/categories?post=14217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalraasta.com\/blog\/wp-json\/wp\/v2\/tags?post=14217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}