INTRODUCTION:
It’s rightly said Small businesses are vital to the success of the economy. Not only as they provide the success stories of the future, but also because they meet local, they serve the requirement of larger business. The concept of “Small Company” has been introduced for the first time by the Companies Act, 2013. The Act identifies some companies as small companies based on their capital and turnover position for the purpose of providing certain relief/exemptions to these companies.
Small Companies are well placed to build personal relationships with customers, employees, and suppliers. With a small Company you know who you are dealing with; you can 'put a face' to the person you are in contact with. Person-to-person interaction is as important as ever in building strong relationships. Small Companies are well positioned to introduce and develop new ideas. Due to the small scale of operation, small Companies have lower overhead costs as compare to companies other than small company.
Small company tag is much beneficial to small entrepreneurs aiming at to rotate business at a quite fare level and operate within the limits specified under Section 2(85) of Companies Act 2013.
Small Company Definition as per Companies Act 2013
“Small company’’ means a company, other than a public company,-
- paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; AND
- turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
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