What Does it Cost to Start and Operate a Private Limited Company in India?

Narendra Kumar

04 Dec, 2020

Registering a private limited company was complex process prior to 2018. in 2018 after RUN form the MCA has simplified the registration process. In this article, we will discuss the cost to operate Private Limited Company Registration and procedure for company registration.

What is a Private Limited Company?

Companies Act 2013 has been passed by the parliament in which various amendments related to the corporate affairs are made. Although a private limited company has similar characteristics like that of a Limited liability partnership, it should have a minimum of 2 members which can go up to 200 members. However, the liability of the members is limited. A private limited company should have a minimum of 2 directors and a maximum of 15 directors. For its legal registration, a minimum of 2 shareholders is a must.

You need to register a private limited company, if you are willing to start a business, in going concern, You need to inform to the Ministry of Corporate Affairs for every small change in MOA & AOA. Let’s find the cost attached to start and run and also the requirements of the private limited company.

What are Start-up costs to operate Private Limited Company in India?

The cost of Company Registration has reduced in India in 2018.  The company registration procedure very complex prior to 2018. The company registration cost in India is the same across all states except Madhya Pradesh, Punjab, and Kerala. Stamp duty rates are much higher in these three states. there are no ROC Fees incorporate a private limited company with a minimum authorized share capital of INR 10 lakh. there is Stamp duty in states mentioned above, on an average Private limited company registration cost in the INR 14,000 to INR 20,000. You need legal help from the chartered accountants or CS, and their charges may vary depending on their experience and expertise. If you get this done in online the charges may be lower, and it can start from INR 7,000.

Cost: For authorized capital, the one- time cost will be around INR 14,000 for INR 10 lakh of authorized capital

What are the business Registration requirements for starting up a company in India?

The government requires the license number for all the business. GST Registration is necessary, if you sell goods or services to the customer, then you must charge good & service tax to the customers when your turnover Exceed Rs. 20 Lac in a financial year. For selling goods the company must need GST registration. you may need to apply for MSME Registration to avail benefits of startup India initiative.

The Mandatory compliances for setting up of a private limited company:

Every company must make a whole bunch of declaration to the Ministry of Corporate Affairs. If you have a new company, then draft the minutes of the board meeting, hiring an auditor and much else. It is a small job when taken individually, but it is time-consuming when seen as a whole.

Cost: Online legal companies will do this for INR 15,000 per year including government fees, but it will double in case service taken from local CA/CS.

What is Accounting and Auditing requirements for Private Limited Company?

Accounting is not necessary for a private limited company. All companies need to maintain their books, let’s consider anyway. Depending upon the entries the charges may vary, it usually starts from INR 2500.

Auditing is done once in a year, and it is mandatory

Cost: The minimum cost for accounting is INR 2500 for a month, and auditing minimum cost is INR 15,000

Miscellaneous Compliances to Operate Private Limited Company:

The company needs to be informed by the Ministry of Corporate Affairs when you make changes in the structure of the business. If a director is added or replaced and when the company shifts to a new place it has to be informed to MCA. Each of these will cost money.

Cost: The cost of a provisional fee is INR 1500 to INR 2000.