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Common Mistakes to Avoid When Registering Pvt Ltd Company in Chennai

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Last Updated on April 20, 2023 by Kanakkupillai

Introduction

The registration of a private limited company is a multi-step, challenging process that involves several legal complexities at almost every stage. Owners consequently find it quite difficult to properly adhere to the entire method alone. Even if they try, they will unavoidably make mistakes because of their inexperience, lack of comprehension, and lack of expertise in the activity.

As a result, to start their operations without any hindrances, business owners must fully comprehend the entire registration procedure for a private limited company.

Key Takeaways

  • The five main errors owners frequently make while registering a private limited company are covered in this blog post for the benefit of interested readers, along with advice on how to avoid them.
  • Failure to register for taxes can result in legal issues and fines.
  • For instance, the name of the proposed company must be reserved before applying to incorporate and register a private limited company in India.
  • As the first prerequisite to forming a private limited company, make sure the directors have gotten a digital signature certificate.
  • Given that Kanakkupillai is the top provider of company formation and compliance services for Indian company owners, we heartily suggest Kanakkupillai.com, a web portal of Govche India Private Limited.

Common Mistakes in Pvt Ltd Registration

The five main errors owners frequently make while registering a private limited company are covered in this blog post for the benefit of interested readers, along with advice on how to avoid them.

Mistake #1: Incomplete or Inaccurate Information on Forms

Explanation

Insufficient supporting documents may cause delays or even rejection of your application. When submitting your application, make sure you have all the required documentation.

How to avoid this mistake

The required supporting documents must be uploaded to the online SPICe+ application form after the company information has been entered in Part B. The applicant’s digital signature certificate (DSC) must be used to sign or attest all required paperwork. The permanent account number (PAN), a proof of identity, a proof of registered address for the applicant director, and a proof of registered office address are all required supporting documents that must be submitted with the incorporation application to the Registrar of Companies.

If the office space is rented, a lease and an owner’s no-objection certificate are needed. On the other hand, property paperwork and a no-objection certificate from the business owner are necessary if the office space is owned by the business owner. Important papers that must be submitted with the application include the company’s electronic memorandum of association (e-MoA) and electronic articles of association (e-AoA), which were filed using the INC 33 and INC 34 forms, respectively.

Mistake #2: Choosing the Wrong Business Structure

Explanation

Problems may arise later if the wrong corporate structure is chosen. If you want to know if a private limited company is the best legal form for your company, do some research and consult with professionals.

How to avoid this mistake

Public limited, private limited, and one-person companies are the three legal categories under which companies can be registered. Startups that have received significant investment to conduct extensive commercial activities with plans for development and expansion typically register as public or private limited companies. For public limited companies to be registered, there must be a minimum of 7 shareholders and 3 directors.

They are consequently larger than private limited businesses, which can operate with as few as two shareholders and two directors. Since there is no minimum or maximum capital requirement, it is simpler for small businesses to start as public or private limited companies before expanding quickly.

Another significant distinction is that a public limited company has the freedom to sell its shares to anyone, distributing the cost of ownership over a large number of people. A private limited company, on the other hand, offers restricted shares that it can only sell to its investors and promoters.

Mistake #3: Ignoring Tax and Compliance Requirements

Explanation

Registering for taxes is a requirement for private limited companies. Failure to register for taxes can result in legal issues and fines. A company registered in India is required to adhere to the yearly legal compliances outlined by corporate regulations including the 2013 Companies Act. Since the majority of startups run businesses, annual compliance for private limited companies becomes the most noticeable annoyance faced by expanding enterprises.

How to avoid this mistake

Strictly adhere to the private limited company income tax compliance requirements outlined below:

  • Calculating and paying advance tax every quarter
  • Submitting a tax return for income (taxes are payable at a flat rate of 30% + an education cess)
  • Tax audit—Required if a business’s sales, turnover, or gross receipts exceeded Rs. 1 crore in the prior year that was relevant to the assessment year.
  • Reporting a tax audit

Mistake #4: Not Getting Professional Help

Explanation

The majority of new business owners are either unaware of the requirements they must fulfill before starting their operations or choose not to because doing so would incur hefty professional costs. Unfortunately, they are frequently unaware that the fines levied for non-compliance are far higher in cost than the fees assessed by experts. Also, if legal action is taken against your company, that could result in its closure.

Hence, to prevent such dire consequences for your company, we advise hiring professionals and utilizing their compliance services.

How to avoid this mistake

To ensure that you do not encounter any problems in the long run, it is always possible and recommended to engage professional counsel for the purpose. The price of these expert services shouldn’t deter you from aggressively seeking them because even the slightest error during company registration could result in serious consequences for your firm, including heavy fines.

Mistake #5: Failing to Plan Ahead

Explanation

The successful registration process might be seriously hampered by a lack of preparation. For instance, the name of the proposed company must be reserved before applying to incorporate and register a private limited company in India. The registrar will hold the application for 60 days after it has been approved.

How to avoid this mistake

Within those 60 days, the promoters must apply for the incorporation of a company. If you don’t, the reserved name may expire, and you’ll have to submit a new application to get a name.

  • The owners must choose the kind of business they wish to run before forming a private limited company. 
  • To form your private limited company, make sure you have a minimum of 2 and a maximum of 200 shareholders.
  • Make sure your firm can be incorporated with a minimum of 2 and a maximum of 15 directors.
  • As the first prerequisite to forming a private limited company, make sure the directors have gotten a digital signature certificate.
  • Verify that you have gotten the director’s identification number well in advance.

Conclusion

A recap of the common errors to avoid

The five biggest errors one should avoid before starting the registration procedure for their Private limited companies are summarized as follows:

  1. Incomplete or inaccurate information on forms
  2. Choosing the wrong business structure
  3. Ignoring tax and compliance requirements
  4. Not getting professional help
  5. Failing to plan ahead

One may avoid making these five critical errors before registering their private limited companies by properly following the related advice we have offered in this blog post.

Final Thoughts and Recommendations

The five primary errors that we have covered in this blog post must be avoided at all costs to successfully register a private limited company.

Nonetheless, we advise seeking professional assistance in this area to guarantee a trouble-free and seamless completion of the pvt ltd company registration in Chennai.

Given that Kanakkupillai is the top provider of company formation and compliance services for Indian company owners, we heartily suggest Kanakkupillai.com, a web portal of Govche India Private Limited. Kanakkupillai.com has been utilized by more than 8,000 Indian business owners to create and manage private limited companies.

Private Limited Company registration in Chennai by Kanakkupillai

You can get assistance from their team of qualified professionals with anything from compliance to paperwork. With the aid of a qualified certified public accountant and lawyer’s guide, they can register your new business at the most affordable price.

With their top-notch service, Kanakkupillai.com will ensure that your Company is incorporated in just 7 days.

The registration process for a business with Kanakkupillai.com is straightforward and can be finished online in three simple steps:

  • The Ministry of Corporate Affairs (MCA) mandates that all businesses have registered directors, which they can assist you with.
  • Choose a name for your business. (Use their firm name search or get in touch with them for help.)
  • They will prepare and submit the necessary documents, including the MoA and AoA, that your company needs to register.

We anticipate that based on our discussion thus far, this blog post will be helpful to all those curious readers who have already decided to begin the registration process of their private limited companies.

Kanakkupillai

Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.