Private Limited Company and LLP is the most popular corporate entity that is registered extensively in India. It is governed by the MCA (Ministry of Corporate Affairs) and regulated by the Companies Act, 2013 and the Companies Incorporation Rules, 2014 and Partnership Act, 1932. Private Limited Company (Pvt Ltd) registration is the most popular legal structure option for Start-ups & Growing businesses in India. Limited Liability Partnership (LLP) registration is Perfect business solution for Small and Medium sized ventures going for collaboration.
The process for company registration begins with obtaining digital signatures. Next, the name approval form is submitted. The Government typically provides name approval within 48 hours. Then, legal documents are prepared which need to be signed by the directors and share holders.
Once the documents are verified, your engagement manager will apply for incorporation with the MCA on the same day. Incorporation approval in about 48 - 72 hours of business days.
Here's a list of tasks that our team of experts accomplish in Company/LLP Incorporation.
Here's a list of documents required for Company/LLP Incorporation
Sole Proprietary is one man entity where there is no difference between owner and the entity. All the responsibility is on the owner himself. Likewise, he takes all profit and losses himself and Income Tax return is filed with proprietor PAN.
Partnership is owned by two or more people where the ownership and share in profit and losses are split between the owners in a certain agreed ratio and it’s established through the partnership deed.
Limited Liability Partnership
LLP is like a blend of sole proprietorship and partnership. Here few or all partners have limited liability in the organization and established through registration with MCA site http://www.mca.gov.in/.
Private Limited Company
It is a business entity formed under Companies Act, 2013 with a minimum of 2 members. Shareholders are the owners of Private Limited Company and it’s established through registration with MCA site http://www.mca.gov.in/.
Sole proprietorship and Partnership entities can choose any name of their choice. For Example: Ram & Associates, Laxman & Co.
In case of Limited Liability Partnership, its name should end with LLP. For Example: Ram & Associates LLP
Private Limited Company's name should end with Pvt Ltd For Example: Ram & Associates Private Limited
However, before choosing any name for your organisation you would have to ensure that no company has already registered with that name through this link http://www.mca.gov.in/mcafoportal/viewCompanyMasterData.do and then you would have to check whether there is any trademark registered with that name through this link https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx
If neither a company has registered or nor trademark has registered with your desired name then you may go with that name provided that is allowed under the Trademark Act, 1999 and not violating the other Indian act also.3. Governing Act of Proprietorship, Partnership, LLP & Pvt Ltd Co.
Before commencing a business one should know the rules of its respective law and proceed accordingly as the law states.4. Registration of Proprietorship, Partnership, LLP & Pvt Ltd Co.
Sole proprietorship is not regulated by any act. So, there is no registration required.
For example- To open a new grocery store, there is no registration required. However one may proceed with the compulsory GST registration when the sales cross the threshold limit of turnover. The limit for the sales/ turnover is more than 40 lakhs in one financial year or in case of services if the turnover is more than 20 lakhs
For a Partnership entity, a partnership deed is to be created for registering it legally. Also registration with the registrar of firms can be done by filling an application form signed by all partners. Even if the registration is not done, partnership will be legally valid.
Limited Liability Partnership's registration is made by filing with Ministry of Corporate Affairs (MCA)Private Limited Company, the process is almost same as that for LLP.5. Ownership under Proprietorship, Partnership, LLP & Pvt Ltd Co.
Owner of sole proprietorship is the proprietor himself, it’s a one man company
Partnership is owned by its partners. There are different kinds of partner’s i.e. active partner or sleeping partner all the partners are owners of the entity
LLP’s owners are its designated partners
A private limited company's owners are its shareholders. The board of directors runs the company but ownership lies with the shareholders only.6. Income tax liability for Proprietorship, Partnership, LLP & Pvt Ltd Co.
Sole proprietors tax is calculated in the same way as that of an individual's i.e. at slab rate as applicable to an individual
In case of partnership and LLP tax rate is 30%. No benefit of slab rate is not given
For the private limited company tax rate is 25% flat however if the company will forgo the benefit of various deduction available under the chapter VIA and the Section 10AA then the tax rate would be 15% if any new company will be incorporated and 22% if the company is old.7. Minimum and Maximum members for Proprietorship, Partnership, LLP & Pvt Ltd Co.
Registration under GST law is compulsory for entities with more than Rs 20 lakhs turnover in services and more than Rs 40 lakhs turnover in goods.
After registration, returns are to be filed monthly or quarterly Filing annual return is also compulsory. However, annual audit is to be done with a Chartered Accountant only when turnover is more than Rs 5 crores
b. Income tax compliances (Applicable in case of Proprietorship, Partnership, LLP & Private Limited) Filing income tax return is compulsory Tax audit is to be done, if the turnover is more than Rs 50 lakh in case of professional and Rs 5 crore for others
c. PF and ESI (Applicable in case of Proprietorship, Partnership, LLP, & Private Limited)
Every organization has to make a registration when the total number of employees exceeds 20. And after registration it’s compulsory to file monthly retur
d. Other compliances under the respective laws
In case of LLP and Private limited company there are other compliances which one needs to fulfill for the LLP Act and Companies Act respectively:
In case of Private Limited Company the following are the indicative compliances needs to fulfilled by a company
a. Statutory audit under the companies Act from a CA.
b. Maintenance of proper books of accounts as per the companies act, 2013
c. Filing of Annual return under Form AOC 4
d. Maintenance of compulsory registers under the Companies Act, 2013
e. Holding of 4 Board of directors meeting in one financial year
f. Minimum one lakhs authorised capital
In case of LLP the following are the indicative compliances needs to fulfil by a LLP
a. Statutory audit under the companies Act from a CA if the turnover is more than 40 lakhs.
b. Maintenance of proper books of accounts
c. Filing of Annual return
9. Estimated yearly compliance cost of Proprietorship, Partnership, LLP, & Pvt Ltd
In case of sole proprietorship and Partnership, there are no yearly compliance cost as there is no mandatory registration
For LLP, there is cost of maintenance of books of accounts, statutory audit and annual return filing which can come up to Rs 25 thousand approximately
For private limited company, there are many yearly compliances such as maintenance of books of accounts, return filing, BOD meeting and audit by a chartered accountant which can cost a minimum of Rs 50 thousand approximately
10. Benefit for Proprietorship, Partnership, LLP, & Private Limited
a. Benefits of Sole proprietorship and partnership
b. Benefits of LLP and Private Limited Compan