Company Incorporation Services in India

A Private Limited Company (Pvt. Ltd.) is the most common form of company registration in India and is governed by the Companies Act 2013. A Pvt. Ltd. business entity, privately owned by a group of individuals or shareholders, is an ideal choice for startups and businesses. This structure offers limited liability, making it highly attractive for entrepreneurs looking to protect personal assets while driving growth.

Pros

• One of the most significant advantages of a Private Limited Company is that it offers limited liability protection to its shareholders. This means shareholders' personal assets are not at risk in case of any legal or financial issues faced by the company.
• A Private Limited Company has its own legal identity, allowing it to own assets, enter into contracts, and sue or be sued in its name.
• Raising capital is easier for a Private Limited Company as it can issue shares to investors.
• Private Limited Companies also benefit from several tax advantages and incentives, such as lower tax rates.
• Additionally, a Private Limited Company allows 100% Foreign Direct Investment (FDI).

Cons

• Private limited companies must comply with various legal and regulatory requirements, including annual filings and other reporting obligations.
• Directors of a private limited company have greater personal liability for the company's debts and obligations compared to shareholders.
• Shares in a private limited company cannot be freely bought or sold, making it challenging for shareholders to exit the business or for new investors to join.
• Additionally, the number of shareholders in a Private Limited Company cannot exceed 50.

‍

This type of business can be owned by a minimum of two individual(s) and a company, the owners of a Partnership have limited liability much like the shareholders of a Private Limited Company.

Pros

• An LLP has no minimum capital requirement and can be formed with minimal capital investment.
• The cost of registering an LLP is lower compared to incorporating a private limited company.
• LLP Partners enjoy limited personal liability for the partnership's debts and actions.
• Upon incorporation, an LLP's name is legally protected, ensuring no other limited liability partnership or company can register with the same or a similar name.

Cons

• LLPs are typically less tax efficient because all profit is taxed in the year it is earned, regardless of whether it is distributed to members or retained in the business.
• An LLP does not have equity or shareholding like a company. Consequently, angel investors, HNIs, venture capital, and private equity funds cannot invest in an LLP as shareholders.

‍

A Sole Proprietorship has one owner who is personally responsible for any profit and losses. The business and its director are considered as a single entity.

Pros

• OPCs enjoy several exemptions, resulting in a lower compliance burden compared to a Private Limited Company.
• It is easier for OPCs to secure loans from banks compared to proprietary firms.
• The liability of the member is limited to the unpaid subscription money.

Cons

• The primary drawback of OPC registration is the limitation on the number of members; it can have only one member.
• OPCs are suitable only for small enterprises and are not suitable for large enterprises. 
• OPCs cannot avail of Foreign Direct Investment (FDI).
• An OPC cannot be incorporated or converted into a company under Section 8 of the Companies Act.