Getting Started with a Limited Company

Dear Friend, Now days India experiencing boom in start-ups. Current Govt. is providing various facilities to new entrepreneurs to start and fund their ventures.

A Private Limited Company is most preferred business structure for starting new venture. In this post we will discuss the advantage and characteristics of pvt ltd company, which make its best from other options:-

 

Advantage of Pvt Ltd Company

  1. Separate Legal Entity: The shareholders and directors are separate from company. They are not liable for liability of company.
  2. Uninterrupted Existence: Since Shareholders/ directors are separate from company, hence company can exist even after the death of any/all shareholders/ directors.
  3. Free Transferable : Shares of a Pvt ltd company is free and easy as compared to proprietorship business.
  4. Ownership is separate from management : The Status of Directors and Shareholders are separate. Their rights & duties are different. However It is possible that an Individual may be shareholder as well as director.

 

Manage a Pvt Ltd

Secretarial Requirement

  1. Board Meetings : Companies Act, 2013 required that directors of the company must meet at least 4 time in a calendar year and and gap between two meeting shall not exceeds 120 days.
  2. Annual Audits : A Company is required to gets it books of accounts audited by an Independent Chartered Accountants. In additions to it certain companies are required to get secretarial audit and cost audit done by independent Company secretory and cost and Management accountant.
  3. Filing of Annual Accounts: A company is required to file its annual accounts and annual return with registrar of companies.

Taxation Requirement

  1. Income Tax Return: A company is required to file its income tax return irrespective of profit amount. An startup company is exempt from payment of Income tax for Three years.
  2. Minimum Alternate Tax: Under Income Tax,  there are various incentive available to companies in result profit computed under income tax will be nil or negative in contrast profit reported in books. In that case companies are required to pay tax @ 18.5% on its books profit.
  3. Tax Deduction at Source (TDS)/ Tax Collection at Source (TCS) : A company is required to deduct tax at source at the time of making various payments. In same way its required to collect tax at the time of receiving certain payments.
  4. Goods & Service Tax (GST): A company is required to collect and pay GST on its supplies if any of following condition is met:-
    1. Crossed Turnover of Rs. 20 lacs
    2. Made Supplies in other state
    3. Use services of e-commerce operator.
    4. it self a e-commerce operator
    5. Making Import / Export

 Closing a Company

A company may be closed in either of two way:-

  1. By Company Law Tribunal: A company itself or registrar of company may file an application with National Company Law Tribunal for winding up. Where application filed by company it must be approved by 75% of shareholders of the company.
  2. Under Insolvency & Bankruptcy Code:  Where a company makes a default in payment of any due amount, it may itself or its creditor may file application under Insolvency and Bankruptcy code. In such case authority may order winding up.

 

I hope this post will give you basic idea about the managing a Pvt Ltd company. In case you need further help reach us at www.vPlus.co.in

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