Private Limited Company VS. Sole Proprietorship
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Private Limited Company
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Sole Proprietorship
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Separate Legal entity
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Not a Separate Legal Entity
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Limited Liability
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Unlimited liability
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Perpetual succession
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No perpetual succession
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Loan not the sole responsibility of the owner
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Loan-sole responsibility of the owner
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Registration with MCA required
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Registration not required
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Finance – credit record of the Company
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Finance – credit record of the Owner
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To avail the benefits that accrue to a Private Limited Company (PLC), the Sole-Proprietor can opt to convert his existing sole proprietorship into a Private Limited Company. The PLC structure is different to that of Proprietorship. It has to have minimum 2 Directors and 2 shareholders. The most important feature being that the liabilities are limited to the extent of the value of shares held by the Member of the PLC. This would enable entrepreneurial minded persons to take the risks of doing business without the botheration of litigations and liabilities getting attached to the personal assets.
Changes to be made after Conversion:
Under Companies Act, 2013
a. Print the new Memorandum and Articles of Association with new Certificate of Incorporation.
b. Affix name plate on the outside of every office or place in which its business is carried on
c. In case of One Person Company, the words "One Person Company" shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.
d. Arrange for Common seal, if any.
e. Print it letterhead, business letters, billheads, letter papers and all its notices and other official publications.
f. Print the hundies, promissory notes, bills of exchange and such other documents a
g. Arrange new rubber stamps with new name
File Necessary Amendment Application with the following Organisations/Agencies:
a. Update Entity DSC
b. Bank(s) where the entity maintains its Account(s)
c. Update PAN/TAN/GST
d. Basic Utility Service Providers (eg: Electricity, Water, Internet, Telephone etc.)
e. Inform all the concerned parties where company has made investment(s), taken loan(s), given guarantee(s)
f. Intimate Insurance companies,
g. Update agreements etc.
h. Intimate and update where the entity applies for tenders
i. Goods and Services Act
j. Shops & Establishment Act
k. Private Security Agency Act
l. EPFO
m. ESIC
n. MSME, FSSAI, DIPP, EXIM, FEMA registration, if any
o. Trade License, Professional Tax
p. Factories Act and other Labour Laws
q. Industry Specific Laws
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