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Is It Possible to Form A Private Limited Company from Home?

A private limited company or an LLP can be easily incorporated by giving away the address of one’s residence as the address of the registered office. It however requires the furnishing of adequate proofs for the respective address. In this article we shall see is it possible to form a private limited company from home.

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Is It Possible to Form A Private Limited Company from Home: Introduction

Why should success always lie far off from one’s comfort zone? Does it sound too good to be true, if one could stay at home and still manage to establish a great business, right there at home? Surprisingly, yes, it is very much workable!

Most often a common man chooses to step into entrepreneurship for the purpose of freedom and autonomy. Laying a hard and fast rule that a business thus established should be in a corporate office or in a commercial space would dilute the essence of entrepreneurship.

Further, most start-ups are not fortunate enough to have deep pockets to invest in a commercial setup to start their businesses. Renting a space, let alone buying one, could be too much of an expense for a start-up business along with the expenditure pertaining to the registration of the company.

Furthermore, now that most businesses have gone online and contactless, a physical dedicated office is almost the last thing on an entrepreneur’s mind. Therefore, it is only natural that several businesses seek to avoid sophisticated office spaces to kick start their businesses, and intend to begin their businesses right in their own living room. But there comes this million-dollar doubt if their residential space could act as the registered office at the time of incorporation of the company. 

Is It Possible to Form A Private Limited Company from Home: Registered Office of a Private Limited Company:

The registered office of a company to be incorporated is essentially a place where the business dealings of the company take place. In other words, it is the official address of the legal entity, say a private limited company or LLP into which the business is incorporated.

While making an application for registering a private limited company, the official address of the company to be registered has to be mentioned and the same has to be substantiated with the required documents as the address proof.

Documents Required to be Furnished as Proof of Address:

The copies of the following set of documents have to be attached, as the proof of address, while making an application for the registration of a private company:

  • Utility bills such as telephone bills, electricity bills, or water bills, not older than three months on the date of making the application
  • Rental agreement duly notarised
  • Rental receipts
  • If the property is an owned property, the sale deed or property deed
  • If the property is rented out for the company, a NOC from the owner.

REGISTER A PRIVATE LIMITED COMPANY IN INDIA

Is it Possible to Register a Private Limited Company with a Residential Address?

The good news is Yes! It can be registered as long as the space is suitable for the respective business. Nowhere in the Companies Act,2013, is it mentioned that one’s place of residence cannot be one’s place of business. All that the registration of a private company requires is that, an official address for the business with the stipulated proof for the same. Therefore, a business owner can very well substitute the residential address in the place of the registered office’s address of the private company.

However, as aforementioned, a NOC is mandatory for a property that is rented out in such cases. The MCA (Ministry of Corporate Affairs) grants the certificate of incorporation if the proofs furnished are satisfactory. In several cases, the start-ups register the company with a residential address as the address of the registered office and thereafter establish one or more branch offices if required for the purpose of carrying out the business. If need be, the private limited company may choose to operate from the branch office thus established in an alternate address.

Oftentimes, entrepreneurs wish to register their residence address as the address of the registered office, as it is permanent. This would avoid the unwanted hassle of toggling between various addresses after the incorporation of the company. Given the initial instability and uncertainty in the early days of a start-up, measures such as these always come in handy until the business is stabilized and permanent office space is allotted for the company.

Merits and Demerits of Registering a Private Limited Company with Residential Address:

Incorporating a private limited company, with the residential address has its own advantages and hindrances, although it might seem to be a straightforward option to go for.

Merits:

  • The biggest advantage of pursuing this is that it is easy on the pocket and would not cost the business owner a fortune to build or rent a private space solely for business purposes
  • Any communication made to the registered office would be received by the authorized person, which would prevent the missing out of crucial information and also would avert fraudulent actions
  • The place of business can be changed as per the convenience, yet the address of the registered office address would remain the same, thus avoiding the cumbersome procedure of carrying out the paperwork of changing the address of the registered office frequently
  • Registration under GST and other such formalities can be easily done when the residential address is used.

Demerits:

  • When the residential premises is utilized for business purposes, there is a breach of privacy of the owner or the director residing there
  • If the place of business, thus registered with the residential address is registered under the Shops and Establishments Act, then the taxes applicable will be those pertaining to a commercial space which are generally high
  • The infrastructure of one’s own house may not be so suitable for a business place and may not give much credibility to the clients

While the Companies Act, 2013 gives a number of emoluments to new-gen entrepreneurs, the lenience to incorporate a private limited company within one’s own home is undoubtedly a huge perk. This would indeed give the most required push to a number of them who are contemplating how to start a business. 

Although the merits and demerits of having the residence address as one’s business address vary on a case-to-case basis, it is definitely a huge advantage for establishing a private limited company.

Therefore, your home needn’t be the place where only your heart is, it can very well be the place where your business wings! Reach out to the experts at Vakilsearch and register your company, also from the comfort of your home.

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