How to start a limited Liability Company

The world of entrepreneurship is exciting, and for many, a Limited Liability Company (LLC) is the chosen vehicle for their ventures. This Article simplifies the LLC formation process, equipping you with the knowledge to navigate each step with confidence.

To start a limited liability company (LLC) in India, follow these steps:

1. Choose the Type of LLC:

In India, there are two main types of LLCs:

Private Limited Company (Pvt. Ltd.): This type of LLC is governed by the Companies Act, 2013, and the Companies (Incorporation) Rules, 2014. It is a popular choice for businesses as it provides limited liability to its shareholders and is relatively easy to manage.

Public Limited Company: This type of LLC is also governed by the Companies Act, 2013, but it is more suitable for large businesses. It allows shares to be held by the general public and can be traded on stock exchanges or subscribed through Initial Public Offering (IPO). A public limited company must have a minimum of 7 shareholders.

These types of LLCs are the closest equivalents to the traditional LLC structure found in other countries.

2. Obtain Required Documents:

 Digital Signature Certificate (DSC): Required for submitting electronic documents. Apply for a DSC through the Ministry of Corporate Affairs (MCA) website.

 Designated Partner Identification Number (DPIN): Required for the designated partners. Apply for a DPIN through the MCA website.

 Memorandum of Association (MoA): The charter document that outlines the company’s objectives, capital structure, and other key details.

 Articles of Association (AoA): The rules and regulations that govern the internal management of the company.

3. Incorporate the Company:

 Fill Form 1: Apply for the name reservation of the company on the MCA website.

Fill Form 2: Submit the incorporation documents, including the MoA and AoA, along with the required fees.

Fill Form 4: Submit the details of the company’s directors and designated partners.

4. Obtain Certificates:

 Certificate of Incorporation: Issued by the MCA after the company is successfully incorporated.

 Certificate of Commencement of Business: Issued by the MCA after the company has completed all necessary formalities.

5. Open a Bank Account:

 Open a Current Account: In the name of the company with a bank authorized by the Reserve Bank of India (RBI)[.

6. Comply with Taxation:

Income Tax: The company is required to file annual income tax returns and pay taxes as per the Income Tax Act, 1961.

Goods and Services Tax (GST): The company is required to register for GST and file returns as per the GST Act, 2017.

7. Maintain Compliance:

  Annual Filing: The company must file annual returns with the MCA and obtain a certificate of compliance.

 Board Meetings: The company must hold regular board meetings and maintain minutes of these meetings.

By following these steps, you can successfully set up and maintain a limited liability company in India.