Whether a Private Limited company is a boon or bane to startups depends on
various factors and can vary from case to case.
Here are a few pros and cons to consider:
- Limited Liability:
One of the main benefits of a Private Limited company is that the liability
of the shareholders is limited to the amount of capital they have invested.
This means that the shareholders are not personally liable for the company's
- Separation of ownership and management:
In a Private Limited company, the shareholders are the owners of the
company, and the management is separate. This allows for a clear division of
responsibilities and can help to prevent conflicts.
- Attracting investors:
A Private Limited company structure can be more attractive to investors, as
it offers them limited liability and a clear division of ownership and
- Brand Image:
Having a private limited company gives a professional image to the business,
which can help to attract customers and clients.
- Legal and compliance requirements:
Setting up and maintaining a Private Limited company can be more complex and
time-consuming than other business structures, as it requires compliance
with various laws and regulations.
- Higher costs:
Setting up and maintaining a Private Limited company can be more expensive
than other business structures, as it requires various legal and
- Difficult to raise funds:
A private limited company may find it difficult to raise funds in comparison
to a partnership firm or sole proprietorship as investors look for more
stability and assurance.
- Limited flexibility:
The decision-making process of a private limited company is more formal and
structured, and can be less flexible than other business structures.
Procedure to Register Private Company
Here is the general procedure for registering a Private Limited company
- Obtain a Digital Signature Certificate (DSC) and Director Identification
Number (DIN) for all the directors of the company
- Choose a unique name for the company and get it approved by the
Registrar of Companies (ROC).
- submit the director basic docs and file with mca and Obtain a
certificate of incorporation from the ROC.
- MCA will issue the Registration and other PAN and TAN
- Obtain a registration certificate for Goods and Services Tax (GST) from
the GST department.
- Obtain a Shops and Establishment License from the local Municipal
- Obtain other licenses and permits as per the nature of business.
In conclusion, a Private Limited company structure can be a boon for startups
that want to attract investors, establish a professional image and limit
personal liability. However, it also has its own set of challenges like
compliance, higher costs, and less flexibility. Startups should carefully weigh
the pros and cons of different business structures and choose the one that best
fits their needs.