Advantages of company registration in India
A company registration refers to legally registering your business as a corporate entity or company. An incorporated business offers many more benefits over sole proprietorship or partnership firms. We have enlisted the advantages of company registration in India :
Legal Entity/Status or Recognition
Established under the act , a private limited company is a legal entity. The company exists separately with no reliability on its directors or members.
It is taken as a more serious venture in the market as compared to proprietorship/partnership. A registered private limited company gives a sense of confidence to the suppliers and buyers. It also attracts the interests of larger companies., quality workforce and achievement of strategic motivation of employees by taking management decisions.
Limited Liability
The prime advantage of doing business via registered company is the limited liability dependent upon the company’s directors or shareholders. It safeguards the private assets of the businessman in the event of failure and only use the assets of the company to repay debts.
Risk involved with Project Cost
The business which requires high capital investment by entrepreneurs, it is beneficial to have a company registration of the firm. Financial institutions and banks insist on having a private limited company while taking finance for business that involves high stakes.
Perpetual succession
The continuity of a private limited company does not get affected by the death, disability or retirement of its members. Once it is incorporated, it will remain running until it is closed by the provisions of law. This characteristic of a company is called a perpetual succession.
There is no obligation for a Private limited company to commence business/trading within any set time period after its incorporation.
Easy Transferability
In case someone wishes to sell their business, it just requires transferring the entire shareholding to the purchaser and thus organize easy exchange of authority in management and ownership. This saves a huge amount of money required for legal
paperwork, time involved in transfer.
Dual RelationshipIn a private limited company, it is possible to set up an effective contract with any of its shareholders/directors. A person can control the company and enjoy the benefits of being its employee at the same time. A person can be a shareholder, creditor, director and an employee at the same time.
Borrowing Capacity
A registered company can have a better source of borrowing funds. It can issue debentures, secured as well as unsecured, accept deposits from the public, etc.
Banks and financial institutions prefer to render larger amounts to the company rather than proprietorships and partnership firms.
Taxation
Sole business owners and partnership firms pay income tax. Companies which are registered pay corporation tax on their taxable profits. There is a wider range of allowances and tax-deductible costs that can be offset against a company’s profits. Manufacturing companies registered after October 1 will have to pay only 17.01% of effective surcharge and tax which lowest compared to income tax. Agricultural industries and income related to Private Limited Company is 100% exempted from tax.
Conclusion
Legal way LLP is a reputed firm in Pune, which provides consultancy and solutions for all your legal requirements for your business. The advantages of Registering a company in India stated above concludes that it will be a prosperous move towards building a long term and stable business.
