What is a private limited company?
In simple words a Private Limited Company is a separately taxed business entity, where every investor has risk limited to their shareholding, and which isn't "public" as characterized by the Companies Act.
Advantages of private limited company
- There is no minimum capital threshold to establish a private limited firm. The company can be started with only a sum of 10,000 rupees as authorized capital.
- Always remember that a private limited company is a separate legal entity under a legal perspective. The assets and the liabilities of the firm are treated different from the director’s personal assets.
- If the firm was under financial pressure, the personal assets of the members will not be used because the liabilities of the person are limited.
- This is only type of business apart from public limited company that can raise money from venture capitalists.
- Hundred percent foreign investment is allowed in a private limited firm.
- Registering your business builds credibility because the information about your business is available on the public domain once you register your private limited business.
Disadvantages of private limited company
- A private limited company can be only having 200 members
- A private limited company cannot raise capital from a general public nor it can be listed in a stock exchange.
- When a company is registered under PVT LTD company, it needs to follow certain formalities such as conducting board meetings, getting the company accounts audited, the company also abide with the tax and labour laws.
- If you want to wind up the company’s operations the process can be overwhelmingly complicated for the business.
- The registration process will take around 10 to 15 days.
Private limited company registration is a long and complicated process; it is advised to take opinion from the professional in the field.
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