Advantages of a Private Limited Company in Kerala
There are several advantages to incorporating as a private limited company, including:
- Limited liability: As mentioned above, shareholders’ personal assets are protected in the event that the company is unable to pay its debts.
- Continuity: A private limited company has perpetual succession, meaning it continues to exist even if shareholders die or leave the company.
- Flexibility: Private companies can tailor their articles of association (the document that governs the internal affairs of the company) to suit their needs.
- Tax benefits: In India, private companies enjoy certain tax benefits such as lower corporate tax rates and exemptions from taxes on dividends paid to shareholders.
Disadvantages of a Private Limited Company in Kerala
There are also some disadvantages to incorporating as a private limited company, including:
- Compliance requirements: Private companies must comply with various regulations, including filing annual returns and holding shareholder meetings .
- Higher costs: Forming and maintaining a private limited company can be more expensive than other business structures such as sole proprietorships or partnerships .
Steps for incorporating a Private Limited Company in Kerala
Incorporating a private limited company in Kerala requires the following steps:
- Obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA).
- Obtain a Digital Signature Certificate (DSC) from a licensed certifying authority.
- File the Memorandum of Association (MoA) and Articles of Association (AoA) with the Registrar of Companies (RoC).
- Obtain a Certificate of Incorporation from the RoC.
- Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
- Register for value-added tax (VAT), professional tax, and other local taxes, as applicable.
- Obtain licenses and permits required to commence business operations.
Documents required for incorporating a Private Limited Company in Kerala
The following documents are required for incorporating a private limited company in Kerala:
- Memorandum of Association
- Articles of Association
- declaration by each subscriber to the MoA and AoA that he/she is not less than 18 years of age and is competent to contract
- list of Directors including their DINs, addresses, photos, identity proof, and residential proof
- proposed company name approval certificate from MCA
- consent to act as Director from each Director
- address proof of registered office
- electricity bill or water bill or property tax receipt or any other utility bill in the name of the owner at the registered office address
- No Objection Certificate (NOC) from landlord if rented premises is proposed to be used as registered office
- proof of ownership if owned premises is proposed to be used as registered office
- affidavit by first subscriber and Director(s) regarding compliance with the requirements of Companies Act, 2013 and rules made thereunder
- affidavit by Director(s) regarding their willingness to take up directorship, unspent convictions, if any, shareholding in other companies, relationships with other directors, etc.
- prescribed fees
The process of incorporating a Private Limited Company in Kerala
The process of incorporating a private limited company in Kerala generally takes 6-8 weeks. The following are the steps involved in the incorporation process:
- Obtain DINs for Directors
- Apply for name approval from MCA
- File MoA and AoA with RoC
- Obtain certificate of incorporation
- Apply for PAN and TAN 6) Register for VAT, professional tax, and other local taxes 7) Obtain licenses and permits required to commence business operations
The incorporation process may take longer if the proposed company name is similar to an existing company name or trademark.
What are the compliance requirements for a Private Limited Company in Kerala
The Companies Act, 2013 lays down various annual compliance requirements for a private limited company in Kerala. Some of these compliance requirements are as follows:
- Holding of Annual General Meeting (AGM): The Companies Act, 2013 mandates that every company shall hold an AGM every year within a period of six months from the close of the financial year.
- Appointment of Auditor: The auditor of a private limited company in India must be appointed by the shareholders at the AGM. The appointment of the first auditor must be done within 30 days from the date of incorporation of the company.
- Financial Statements: A private limited company in India is required to prepare financial statements for each financial year which shall include a balance sheet, profit and loss account, and cash flow statement. These financial statements must comply with the accounting standards prescribed by the Institute of Chartered Accountants of India (ICAI).
- Filing of Annual Return: A private limited company in India is required to file an annual return with the Registrar of Companies (ROC) within 60 days from the date of holding the AGM. The annual return must contain certain details such as particulars of shareholders, directors, loans and deposits accepted by the company, etc.
- Filing of Director’s Report: A director’s report has to be prepared by every private limited company in India and filed with the ROC along with the financial statements within 60 days from the date of holding the AGM. The director’s report must contain certain disclosures such as particulars of subsidiaries and associates, disclosure on Energy Conservation, Technology Absorption, etc.
Tax compliance requirements
A private limited company in India is subject to tax laws such as Income Tax Act, 1961 and Goods and Services Tax (GST) Act, 2017 . Some tax compliance requirements for a private limited company are as follows:
- Income Tax Return: A private limited company in India is required to file its income tax return on or before 31st July every year detailing its income and expenditure for the previous financial year ended 31st March
- GST Return: A registered taxable person under GST is required to file periodic GST returns as prescribed under GST rules. The due dates for filing GST returns depend on the turnover of the company and the GST registration status (regular/composite/casual).
- Tax Audit: A private limited company in India is required to get its accounts audited by a Chartered Accountant if its turnover exceeds Rs. 1 crore in a financial year. The audit report along with certain other documents must be filed with the Income Tax Department on or before 30th September of the assessment year.
Secretarial compliance requirements
The Companies Act, 2013 and the rules made thereunder contain various secretarial compliances which are to be adhered to by a private limited company in Kerala. Some of these compliance requirements are as follows:
- Board Meetings: A minimum of 4 board meetings are required to be held by a private limited company in India in a financial year, with a maximum gap of 120 days between two consecutive meetings.
- Maintenance of Statutory Registers: A private limited company is required to maintain certain statutory registers such as register of members, register of directors, etc. as prescribed under the Companies Act, 2013.
- Filing of Forms with ROC: Various forms and documents such as annual return, financial statements, director’s report, etc. are required to be filed with the ROC within prescribed time limits.
- Appointment of Company Secretary: A private limited company in India is required to appoint a whole-time company secretary if it satisfies certain criteria prescribed under the Companies Act, 2013.
- Maintenance of Minutes Book: A minutes book must be maintained by a private limited company in India in which all the proceedings of the board meetings and general meetings are recorded.
A private limited company in Kerala is a popular business structure in India that offers many advantages, including limited liability protection, easy formation, and compliance with fewer regulations. If you're looking to set up a business in India, incorporating a private limited company is a good option to consider. Keep in mind, however, that there are also some disadvantages to this type of company, such as increased paperwork and compliance requirements.
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