Whenever a person has a business idea, he also has to think of its cost to set up it. Generally, people think of setting up a company as it has some advantages. The cost of setting up a company is to be analyzed before setting up it. The cost of setting up a business depends upon:
- Initial Authorised share capital
- Number of Directors
- Professional fee charged by CA or CS
The estimate cost to register a Private Limited Company starts from Rs. 12000/-. You should read the complete article to know the exact cost to form a private limited company.
Filing of Incorporation Forms
In India for setting up a company there is need for some legal paperwork for starting operating as a company. The companies Act 2013 is laid down which describes the documents to be filed. These forms and documents are to be submitted to Registrar of Companies (ROC) of the respective jurisdiction. Nowadays these documents are filed online on MCA official website.
Documents to be submitted: This includes the name of the company, procurement of director identification number, procuring digital signature, and other documents such as registered office etc. An expert is needed to be engaged for all this.
Cost: The government fees of the documents which are filed and the expert’s fees. (See table below)
Preparation of Legal Documents
There is legal requirement of drafting some documents. These documents are necessary for starting a company. These documents are Memorandum of Association and Articles of association.
Requirement: These documents are the rule book or we can say the bye laws of the company. These documents will describe the object, scope, registered office of the company and details of the directors, liability of the shareholder. These documents cannot be changed again and again, so these documents should be prepared carefully, involving an expert like a Chartered Accountant or Company Secretary is best.
Cost: Professional fees of expert and filing fees of the documents (See table below)
Tax registration are compulsory for a company for operating. A company must have its own Permanent Account number (PAN), Tax deduction Account Number (TAN) for the income tax purposes. If the company is selling goods then company must have VAT number and in case of providing service, Service Tax number is also required. But after the Goods and Service Tax (GST) these will merge, only one registration number will be required. All these registrations are required for a business to operate legally in the society. There are some other labor laws which may be applicable to a business i.e. Provident Fund, Gratuity, Shop and Establishment etc. Registration of these acts is also required for a business if these acts are applicable.
Cost: A professional can do it well, so the fees of the engaging expert will be cost. (See table below)
All of the above activities are one time, but while running a business there are some compliances which are to be made during the year. A company deducts TDS of the employees, so it also needs to file TDS returns to the authorities. Service Tax, GST returns are also to be submitted time to time. There are many requirements of the Companies Act, 2013 i.e. to file different Forms for every change in the business and decisions taken. Some of these are: Copy of the resolutions taken in meeting, change the shareholding pattern or change in the directorship, change in the registered office of the company etc. Moreover, it also needs to file its Balance Sheet and Profit & Loss. So a company needs to engage a professional for all these requirements as these requirements are to be done as per the prescribed time because a professional can keep track on these timings.
Accounting and Auditing
Accounting is the need of every organization. A company is generally incorporated to earn profits. So, it needs to track its expenses and revenue to find out its profits. An accountant should be engaged for doing the accounting of the company. Auditing is the need of company when its turnover exceeds the prescribed limit. So if the turnover exceeds it needs to get its books of account audited, so a company has to engage a Chartered accountant (CA) for this.
Example to Calculate Estimate Cost to Register Private Limited Company
- We assume minimum share capital = Rs. 1,00,000/-
- Minimum Number of Directors = 2 Nos.
- The table is showing only formality cost (Government Fee).
- The table does not contain any cost of professional fees i.e CA consultation service cost etc.
|Company Registration Formality||Cost|
|Obtaining DIN (500 per DIN)||1000|
|Obtaining DSC (1000 per DSC)||3000|
|Obtaining Name Approval||1000|
|Stamp Papers & Notary Charges for Affidavit||200|
|Company Registration (Filing of Forms)|
|Filing of Form INC 7||300|
|Form INC 22||300|
|Form DIR 12||300|
|Stamp Duty Charges for MOA, AOA and Form INC7 (cost depends on the state of your registration)||700|
|Total Cost of Private Limited Company Registration||9100|
Useful Link for Startups (Government Resources) – http://www.startupindia.gov.in
There are some useful websites to get register private limited company online. All formalities will be managed by these websites. Here you can get the idea about the cost comparison to register private limited company through these websites.
|Website Name||Package Starts From||Visit here|
|Legal Wiz||13899 (Inclusive of All)||Visit Here|
|Indian Filings||15899 (Inclusive of All)||Visit Here|
|My Online CA||14999 (Inclusive of All)||Visit Here|
|Set India Biz||15000 (Inclusive of All)||Visit Here|
Useful Links to Know more about Formation & Registration of Private Limited Company
|Company Important Pages||Check Here|
|How to Form a Private Limited Company||Check Here|
|Documents Required to Form a Private Limited Company||Check here|
|Company Income Tax Rates||Check Here|
|TDS on Payment to Foreign Company||Check Here|
|Advantages of Private Limited Company||Check Here|
|Cost to Form a Private Limited Company||Check Here|
About the Author
Arpit Goyal is pursuing CA and B.com & also working as an article assistant in Gurgaon. He has an immense interest in Taxation. He loves to use technology to spread knowledge about taxation & accounts.