A private limited company is an individual legal entity which is separate from the people who run it. A Private limited company has perpetual succession and its own assets and liabilities, profits and losses. The liabilities are limited to the company - in other words, the owners are protected from financial liability should the company liable for all the liability. This is different from that of a sole proprietorship or partnership firm, where the assets and liabilities of the business belong to the individuals.
For example if you are a sole proprietor you'll more than likely own your ladders and you should liable for all the liabilities. However if these two individuals do business through their own limited company, the company will liable for all the activities.
The most attractive benefit of doing business as a private limited company is the limited liability
Being Limited means essentially this protects the personal assets of the promoters if the company faces financial difficulty.
Many of the costs and administrative expenses associated with running a private limited company are now not much more than other entity.
Private Limited companies also have added confidence in public, suppliers and creditors; many largecompanies will only conduct business with private limited companies.
The ownership of a Private limited company can be easily split up through the sale of shares or transfer of shares.
Further issue of shares can help generating capital i.e. selling shares in your company.
In addition to limited liability, a Private limited company has the following advantages:
You can give a share of the company to others who invested
It may be easier to attract investors in to business.
Getting bank loans may be easier.
If partner resigned, it is easier to continue the business.
It is easier to sell the business.
Company name will be protected.
People have more confidence in your company as the documents will open for public
Any person of any nationality may register a private limited company subject to the below conditions:
They have not been restrained by court order
Under the Company Directors Disqualification Act 1986
They are not punished for moral tribute
All companies are required by law to keep minutes, registers and record of income and expenditure. These accounts must be file with registrar annually.
Yes- yoy must file following documents with Registrar of companies
Full accounts, Balance sheet, P&L Accounts, Directors report and auditors report
To set up a limited company you will need...
1. Company name
2. Registered office address for the proposed company
3. Share holders list
4. Directors List
5. Digital Signature for all the Directors
6. DIN for all the Directors
Yes, you can trade the company immediately after incorporation