The benefits of a private limited company, such as the ability to raise capital easily and accommodate shareholders, come at the cost of greater compliances.
The majority of small businesses do not fulfill their requirements of compliances in their opening years and they end up paying heavy penalties (up to Rs. 1 lakh per year) for failing to do so. In the worst case, such companies and their directors are even blacklisted for a short period of time.
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Various business entities let their compliance requirements pile up, even though checking them requires much less effort. When opting for an investment or a bank loan, business when compliant with the Registrar of Companies (RoC) requirements serves helpful for the same.
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The business must run in accordance with the laws in force.