Emerging as an entrepreneur comes with tons of responsibilities and burdens. Among
several other essential tasks, one inevitable thing is the stress of becoming a private
limited company or not, and if so, how.
If you are still confused about a private limited company and how it works, this article is
just for you!
What Is a Private Limited Company?
We can define a Private Limited Company as a company that works privately and is run
by its shareholders. These companies can have a maximum of 200 shareholders, and
each shareholder’s liability is the same as the total number of sarees they possess. To
get a private limited company, one must fulfill specific requirements. The requirements
are stated below.
Minimum Requirement for Private Limited Company
● There must be two adults as the director of the company.
● Out of the two directors, one should be a citizen of India and an Indian resident.
● The minimum number of shareholders should be two.
● Both the shareholders can either be people or just artificial legal entities.
Advantages Of Becoming A Private Limited Company:
Here are some of the advantages of being a private limited company:
Closely-held entity
In the case of a private limited company, the shareholder can sell their share to another
person. In addition, as the shares are traded in a closed market, there is less chance of
interruption or ambiguity for the company’s management.
Less paperwork
While a public limited company has to abide by the rules and protocols stated by the
PSU, which suggests a lot of paperwork, the private limited company’s protocols are
pretty simple.
Business privacy
When you opt to be a public limited company, it is mandatory for you to maintain
transparency of every detail, including your current work status, progress that has been
made, etc., whenever it is demanded. However, that is not the case because, as a private
limited company, you are only required to pay for tasks and carry on your legal
activities.
Suitable for startup business
Apart from the fact that there is less paperwork involved, starting as a private limited
company has several other benefits. For startups, as a private limited company, one can
easily apply for loans or lendings. In addition, the government offers several cost-saving
ways to a private limited company.
Final Thoughts:
With tons of advantages in hand, registering as a private limited company is the first
thing a startup should go for to set up a successful business. Although you might find
registration work a bit challenging, trust us, it is way better than being a public
company, and after all, you can always have a helping hand for these tasks to focus on
much more important matters.
