Now, more than ever in our rapidly changing business environment it is important to properly structure your entity for long-term growth. The Private Limited Company (PLC) structure is one of the choices favoured by a majority of entrepreneurs. Though, how can you ever know this is the thing
suitable for your business?
In this article we are going to understand who should not be registering a Private Limited Company and why, and also who can register a private limited company. You can check out the various services provided by the BIZPOLE in order to simplify it.
Who should register a Private Limited Company?
Startups & Growing Businesses
In case of a start-up or if you plan for an organization that grows very fast, go with the Private Limited
Company. This framework allows a new or burgeoning business to shield its own debts from the
owner’s personal assets, securing them with certain safeguards that are essential in those critical
phases. In addition, appeals to investors and venture capitalists who understand the structure of a
business makes raising finance much easier.
Companies Looking for Liability Protection
One of the primary and obvious reasons for entrepreneurs to get their company registered as a Private
Limited Company is that it protects them against personal liability. The members liability is limited to
the amount they have invested in the PLC, which means if the business runs into financial distress,
you won’t be just another casualty on a long list of company screw-ups.
Companies Whose Aim is Brand Building
When starting a brand you may wish to consider registering as a Private Limited Company this can
add an element of professionalism and credibility that is helpful when trying to build your castle on
sand. A PLC projects a greater degree of reliability and trustworthiness. It is often seen as a long
established sole proprietorship or partnership, instilling confidence in clients-suppliers- partners.
Multiple Shareholder Businesses
If you have shareholders or expect such privileges to be executed on a substantial scale owing to the
Business, it is best for your business structure as Private Limited Company. This feature lets you give
your shares to all investors and partners, so there are ways of getting the capital raised or
responsibility shared.
Companies in the IPO pipeline
Starting with a Private Limited Company is strategically beneficial even if at some point in the future
you want to take your company public. Finally, when the right time comes and you want to convert a
PLC into a public company there will be far less for you as founders to set up in terms of corporate
governance.
Companies That Need to Protect Their Intellectual Property
For companies handling a lot of Intellectual Property, the Private Limited Company is also suitable.
Our Trademark Registration and Patent Registration, we use to help protect your brand & creative
assets, so you get legally safeguarded unique offerings for the company.
Who should not register a Private Limited Company?
If you are falling under with the mentioned list, you should not register a Private Limited company
Small-scale low-risk businesses
If you have a very small non registered company and are ready to take the additional financial risk
then maybe registering as private limited might not be necessary. A PLC may be overkill for that
sense of security; Sole-proprietorship or partnership could offer just as much protection without the
mess and continuous compliance requirement.
Businesses with no growth or expansion plans
If your business is settled, and you have no aspirations for big growth or expansion the extra
formalities/compliance requirements of a Private Limited Company could well be an unwanted
burden rather than benefit. In these cases, other structures such as LLPs or proprietorships may be
more appropriate.
Freelancers & Consultants
Freelancers and independent consultants may find that operating as a sole proprietorship is a simpler,
less expensive option. Many people don’t need the compliance costs and administrative work that
comes with registering a Private Limited Company unless you have employees,physical assets etc.
Businesses not prepared for Compliance
The downside of having a Private Limited company is that the ongoing compliance like TAN Application, PAN Application, and LLP Annual Filing if it was an LLP earlier. And if your business is not prepared to meet those obligations this may point you in some other structures that do have a bit less demanding requirements .
As a Private Limited Company in India, ongoing compliance requirements can be overwhelming, including TAN and PAN applications, GST registration, Udyog Aadhaar registration, and annual return filings with the Registrar of Companies. Additionally, companies must file financial statements, income tax returns, and GST returns, and comply with TDS regulations, auditing, and board meetings. Non-compliance can result in late fees, penalties, interest, and even prosecution. To manage compliance, businesses can hire a Company Secretary, engage a Chartered Accountant, utilize compliance software, or outsource tasks to experts. If compliance seems daunting, alternative business structures with less demanding requirements, such as Sole Proprietorship, Partnership Firm, Limited Liability Partnership (LLP), or One Person Company (OPC), may be worth considering, but it’s essential to consult experts to determine the best fit for your business.
Micro-Enterprises with Capital Starvation
However, if you are a small micro-enterprise and have limited access to capital then the cost of
registering a Private Limited Company might supersede the benefits. In these situations, simpler
structures like proprietorships or partnerships also provide operational benefits without additional
financial cost.
BIZPOLE Additional Services
Setting up and running a business is not just about making the right legal choices, we at BIZPOLE
understand that; which is exactly why we have a suite of services that will help your business at every
stage. Our offerings include:
Trademark registration:
To keep your brand identity safe and make sure you differentiate from the
competition.
Patent Registration:
Protect your creative works and intellectual property with our patent registration
services.
TAN and PAN Applications:
Ensure that your business complies with all tax laws by getting a Tax
Deduction and Collection Account Number (TAN) as well as the required Permanent Account
Number(LOGO).
GST Registration and Filing:
This includes around the goods and services tax (GST) registration,
GST filing to stay constantly there in regulation with emerging business-tax protocols.
LLP Annual Filing:
If you are operating as a Limited Liability Partnership, We will help you with the
necessary annual filings to ensure that your business is in good standing.
Why choose BIZPOLE?
How to choose a business structure is one thing, but the other non-optional material you need for your
compliance and registration journey is an experienced professional. Our goal is to make the
experience great, and easy on you so that you can focus on running your business.
Whether you are a startup planning to incorporate as a Private Limited Company, or a small business
working towards Trademark Registration, growing enterprise requiring assistance for GST Returns
and other services. Thanks to our expert team, we will walk you through the entire process and help
your business succeed.
Do not allow the complexities of business registration and compliance to prevent you from moving
forward. Join hands with BIZPOLE and get on to creating the business that represents excellence,
compliance & future success
