When one contemplates starting up his/her own business, we tend to choose either proprietorship or partnership firm as a form of company registration. This tendency to evade choosing a Private Limited Company as a form of business, especially amongst startups, is due to certain notions and myths that surround the private limited company. These myths are passed over from one generation to another that is not relevant to the current ecosystem.
MYTH# 1: Private Limited Company is expensive
MYTH# 2: Shareholders meetings are required often
As per the Companies Act, 2013 it is mandatory for a Private Limited Company to hold an Annual General Meeting. Board meetings are necessary only when special resolutions need to be passed. However, Conducting neither of them is a time-consuming affair. Meetings pertaining to the maintenance of legal compliances of a Private Limited Company is a matter of minutes and is not a tedious or hefty task to perform. Hence, whether it is Annual General Meeting or Board Meetings, it should not come in the way of choosing a private limited company as a form of doing business. Unveiling the Myths Surrounding Private Limited Company
MYTH#3: Partnership and Proprietorship have a lower tax rate
- 25% tax rate: It is applicable only in case of the newly set up domestic company engaged solely in the business of Manufacture or product of article or thing u/s 115BA
- 29% tax rate: It is applicable to companies whose turnover/gross receipts in the previous year 2014-15 does not exceed 5 crore
- 30% if not covered by above 2 points
