The following types of Business entitles are available in India:

• Private Limited Company

• Public Limited Company

• Unlimited Company

• Partnership

• Sole Proprietorship 
  
   

What is a Private Limited Company?

A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from Public and there are restriction on the transfer of shares. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 2.

What is a Public Limited Company?

A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7.

What are the advantages of a Limited Company?

A limited company has following advantages:

• Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid for shares.

• The management structure is clearly defined, which makes it easy to appoint, retire or remove directors.

• If extra capital is needed, it can be raised by selling more shares privately.
  
  It is simple to admit more members.

• The death, bankruptcy or withdrawal of capital by one member does not affect the company's ability to trade.

• The disposal of the whole or part of the business is easily arranged.
  
  High status.

What are the disadvantages of a Limited Company?

A limited company has following disadvantages:

• Requirement to register the company with the registrar of companies and provide annual returns and audited statement of accounts. All details of the company are available for public inspection so there can be no secrecy. There are penalties for failing to make returns.

• Can be more expensive to set up.

• May need professional help to form.

• As a director, you are treated as an employee and must pay tax.

• The advantages of limited liability status are increasingly being undermined by banks, finance house, landlords and suppliers who require personal guarantees from the directors before they will do business.

What entity is best suited?

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliances requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.

What is the minimum paid-up capital of a Private Limited Company?

The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees 1,00,000. There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.

What is the difference between authorized capital and paid up capital?

The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members / public, as the case may be. The paid up share capital is the paid portion of the capital subscribed by the shareholders.

For more information you can visit this website:- http://madaan.com/incorporateprocedure.html

Thanks and Best Regards,

R.C.Sukhtankar