When we think of starting a company, we face a skeptical question of its cost involved. With fear of high cost, we drop the idea and miss the opportunities around. With the internet and transparent pricing, more and more business entities are opting for a private limited company. We have thrown light on the formation of private limited company, the cost involved in starting and running a private limited company.

Initial phase

With the new INC -29 Form, the complexity of registration has reduced and one can easily fast track the process of registration in India. The cost of registration to has reduced comparatively. The cost (Government Fee) of registration is Just Rs. 7000 is incorporated with minimum authorized capital i.e.  Rs. 1 lakh.

You cannot alone file the documents. You have to seek help from professionals such as lawyer and chartered accountant whose charges vary according to expertise and experience. But, the formation of private limited company can be done online with a reasonable sum of money.

Business Registrations

This requires not just for the private limited company but for all the business entities. Every business entity requires some sort of registration number based on the offerings. A shopkeeper sells good and requires VAT registration number. A license is required under Shops & Establishments Act to open a current account, Professional Tax registration if you have employees and much else.

Cost: Expect to spend Rs. 2,000 to Rs. 15,000 per registration, depending upon the type of business and state. The rates vary across India.

Mandatory Compliances

Once a company is incorporated, it has to appoint an auditor, prepare minutes of annual meetings, annual filings of the director and company etc.  Same needs to be informed by the Ministry of Corporate affairs. This may involve much time and energy. Companies seek professional help from CS for the same who may charge up to Rs. 30, 000 per year. Online legal companies like LegalRaasta charge 3499/- (inclusive of government fee) for company annual filing and other services like audit and minutes can be added to the package at a reasonable price saving 40 to 50% compared to typical CA/CS

Accounting & Auditing

Every business entity has to maintain its books of records irrespective of the fact whether it is LLP, One Person Company, Public Limited Company Private Limited Company. Hence, the approximate cost per month would be Rs. 2500 which may vary according to entries in book and workload. Private Limited Companies have to get their accounts audited as it is mandated under companies Act, 2013. This will cost around Rs. 15,000 for auditing.

Miscellaneous Compliances

In case you change the address of your office, appoint or remove the director. Such changes need to be informed to Ministry of Corporate Affairs. In a small company, per job basis, CS is required rather than hiring for part-time or full-time. The approximate cost including the formation of private limited company, government fee and professional hiring fees would be around Rs. 3500 onwards, depending on the complexity of the job.

Our team at LegalRaasta can help you with compliances for Change in director at Rs 2999/- all inclusive.

Unavoidable costs as follows

  • The cost of a Digital Signature Certificate (DSC): Around Rs. 1400

You will need the Digital signature corticated for at least one of the director for the purpose of Incorporation of the company. DSC is obtained from any one of the government vendors. Their approximate prices are generally around Rs. 1400 (including the cost of the token) but can be higher. Some of the well-known vendors are e-Mudhra and Sify.

  • Professional Fee: Rs. 7000 onwards

During Incorporation process, you might seek the help from professionals such as CA, CS, Lawyer or other legal companies. For E.g. The declaration by shareholders and directors; Memorandum and Article of Association and many other such documents need to be signed by the lawyer. Advice regarding the paid up and authorized capital would be required from a company secretary. The charges of such types of the fee may vary according to city, state, experience, and expertise. Some may charge reasonable while some may charge the exorbitant sum of Rs. 1,00,000 as professional fees. Online companies, like LegalRaasta, charge Rs. 7000.

  • Stamp Duty

Different stamp duty is charged for the different amount of authorized capital. The charges also vary as one move from one state to another. For e.g. For the minimum capital of Rs. 1 lakh, the stamp duty is, Rs. 7550 in Madhya Pradesh, Rs. 3025 in Kerala and Rs. 1300 in Maharashtra. Hence, the cost varies with authorized capital and the state.The larger the authorized capital, the larger the stamp duty.

Filing Fee: Starts at Rs. 4600

It includes following fees

  • INC-29 fees of Rs. 2000.
  • Memorandum of Association fees of Rs. 2000,
  • The article of Association fees of Rs. 300 and
  • INC-7 fees of Rs. 300.

For any further query on the formation of private limited company, feel free to contact us at LegalRaasta.