InvestorQ : What are the structures I can use if I want to have two directors and if I want to also limit my liability?
Anamika Sodhani made post

What are the structures I can use if I want to have two directors and if I want to also limit my liability?

1 year ago

You can either opt for an LLC or a PLC model. Here is what you need to know to make the choice.

· Limited Liability Company (LLC) is a flexible business structures as it separates personal and business liabilities. Every owner will have their tax liabilities shared. LLCs are not liable for business debts. Key advantages of LLC are that paperwork in LLC is much lesser which makes the LLC more flexible and easier to form. LLCs also ensure to keep their members safe from the liabilities like personal debts and legal hearings. It also provides tax flexibility where the income, expenditures, and profits become the part of owner’s tax returns. To set up an LLC, you must apply for DPIN (Designated Partner Identification Number) by filling the form online. Acquire your Digital Signature Certificate and register it on MCA portal. Get the approval for your LLC name from the Ministry of Corporate Affairs. After approval, fill the incorporation form to register the LLC and obtain the LLC agreement. Subsequent compliances are simpler than a private limited company.

Private Limited Company must have a minimum of two and a maximum of 200 members (shareholders). Private limited companies cannot raise funds from the public in any form nor can it publicly issue shares. The big advantage is that it is suited to scalable business models. The liability of the owner of the start-up with respect to the company’s debt is only limited to her shares. The shares of the company are easily transferrable to another person. There are more tax benefits in LTDs and the percentage of applied tax is also lesser (now only 22%) as compared to other types of company registrations. The entire incorporation process takes about 20-days to a month but compliances can be quite heavy in the case of private limited companies.