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Preface: This post was originally published in 2022 and has been updated on June 06, 2025, to provide you with the most current and accurate information.
A Private Limited Company is a company registered under the Companies Act 2013. It is one of the most preferred business models in India. A Private Ltd Company offers limited liability protection, a separate legal identity, easier access to funding (compared to a proprietorship) and a feeling of trust among investors as well as stakeholders.
In this blog post, we will discuss certain Do’s and Don’ts before incorporating a Pvt Ltd Company in India.
Here are certain do’s you need to keep in mind before you incorporate a pvt ltd company:
Before you choose a private limited company as your business model, make sure it’s the right business structure for you. You need to thoroughly understand all its benefits as well as flaws. Only then should you come to a decision.
Some benefits of a private limited company are limited liability protection, separate legal identity and better chances of getting loans or attracting investors. On the other hand, some flaws of this business model include strict compliance requirements, more paperwork and limited flexibility for transfer of ownership.
Before registering your pvt ltd company, you must carefully choose the company name. Make sure the name you decide on reflects the kind of business you intend to start. Most importantly, make sure the company name doesn’t already exist or is too similar to an existing company name.
For this, you can conduct a trademark search online. Alternatively, you can consult with a company incorporation/trademark consultant who can conduct the search on your behalf.
You must choose the office location for your private limited company carefully. You must choose the appropriate area depending on the type of business you want to conduct. For instance, if you want to open a brand that sells clothes and accessories, it would be best to choose a commercial space in a market area/shopping mall where your target customers are likely to visit.
However, if you want to open a food business that focuses on delivery, you should consider a location that provides easy access to delivery zones, is easy to locate on Google Maps and offers lower rent for cost management.
When you establish your private company, make sure you have the necessary funds to sustain it. Many companies shut down within a few months of launch. This is a result of poor financial management. Therefore, you need to plan your budget well and keep some emergency funds that can help your business sustain.
Ideally, you must have enough funds to sustain your business for at least a year. This is because most businesses don’t start making huge profits right away. For the initial months, you must mentally prepare yourself for having to spend from your pocket without getting any profit at all. If you feel like you don’t have enough funds, you should consider saving up for them.
The directors you appoint to manage your pvt limited company will largely influence its success. So, make sure you choose them carefully. Since you’re going to be the company owner, it is your responsibility to ensure that the directors you intend to appoint have the right knowledge, required skills and commitment to help your business rise.
If the directors of a Pvt Ltd company are incompetent, it can lead to poor decision-making, mismanagement of resources and ultimately, business’ failure. You may hire directors through job portals like Indeed & Naukri or referrals from your friends and acquaintances. Make sure to interview them properly before hiring them.
Mentioned below are certain don’ts you need to keep in mind before you incorporate a pvt ltd company:
As a business owner, ignoring your business's legal obligations is one of the worst things you can do. Generally, companies need to fulfill corporate responsibilities, receive municipal trade permissions, secure No Objection Certificates (NOCs) from local authorities and ensure adherence to consumer laws.
Despite how burdensome this may be, breaking rules and regulations can result in penalties, legal issues and in the worst scenario, the striking-off of your company by the Registrar of Companies (ROC). Hence, you need to make sure you stay informed and take necessary initiatives to carry out your legal obligations in a responsible manner.
Before starting the company incorporation procedure, you should mentally prepare yourself to satisfy legal obligations to avoid unforeseen obstacles or delays at a later stage.
When you newly establish a company, its fate is unknown and unpredictable. You do not know whether your business will thrive or encounter failure. Therefore, it is essential to protect your company with insurance. By securing crucial insurance policies like liability insurance, you can protect your business from unanticipated events or legal actions.
Make sure you only purchase an insurance policy from an insurance company authorized by the Insurance Regulatory and Development Authority of India (IRDAI). In case you have any doubts about the terms and conditions of an insurance policy, you can seek assistance from an IRDAI-authorized insurance agent or broker.
During the company registration process, a lot of supporting documents are required to validate proof of identity, proof of address and so on. Before you begin the registration process, you must make sure all the documents you plan on filing with the Registrar of Companies (ROC) are accurate, up-to-date and valid.
For establishing identity proof, you generally need basic documents like PAN card, Aadhaar card, Passport, Voter ID and Driving License. If you plan to get a rented office space, you would require extra documents such as from the landlord and rent agreement.
Some common errors individuals tend to make are outdated address proofs, incorrect spelling of landlord’s name, incorrectly drafted Memorandum of Association (MoA) and Articles of Association (AOA), unauthorized signatories, etc. Therefore, you must cross-check all the attachments before final submission to avoid application rejection and reapplication.
We all know that data security is essential in today's modern era. Therefore, once you incorporate a company, you must put in place strict security measures to protect against data leaks and to safeguard confidential company information.
Many companies have faced major losses due to breaching of data, hacking and internal data theft. Therefore, adopting proper cybersecurity practices is a must to protect your business from financial and reputational damage.
You must invest in effective ways to protect your brand name and concepts. If you want to maintain your business competitive advantage, you must safeguard your private ltd co’s intellectual property.
By getting trademark registration for your brand name and logo, you can protect your business from getting copied by other companies. You can get patent registration if your business is involved in producing unique inventions, processes or products that provide a new/useful solution to a problem.
Before you incorporate your private limited company in India, you need to keep certain do’s and don’ts in your mind. The do’s include choosing the right business model, selecting company name, picking the right office location, ensuring enough funding and appointing competent directors. On the other hand, some of the don’ts are ignoring legal obligations, neglecting insurance, submitting incorrect documents, overlooking cybersecurity and undervaluing intellectual property rights. By understanding all the dos and don’ts, you can avoid common mistakes and save your time and effort.
If you need assistance with company registration, contact our consultants at Registrationwala. We’ll help you throughout the entire process and ensure a smooth and hassle-free experience for you.
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