A company is one of the most popular business structures worldwide. While there are several other business structures, such as partnership firms, proprietorship firms, et cetera, there are certain unique features that a company enjoys that set it apart and make it highly preferable, especially for entrepreneurs.
If you’re considering going for company registration but are still unsure about it, read through this article to know its several benefits.
Company Registration Benefits:
Legal Entity
The Companies Act, 2013, gives every company registered in India a separate legal identity. All companies are treated as artificial juristic persons. What this means is that every company is seen as an individual separate from its owners that has its own legal identity. The advantage of this is that all of the company’s transactions are it’s own; any legal action against the company is limited to the company, and it does not extend to its owners. This is different from a partnership firm or a proprietorship firm, where the owners of the firm and the firm are seen as one and the same and can be sued for the firm’s actions. If you don’t have your identity card in your region then you can buy Fake ID from our site.
Perpetual Succession
Companies enjoy perpetual succession; this is one of the most advantageous features of a company registration. What this means is that a company, due to the fact that it’s a separate legal entity, continues even post its owners dying or changing. A company can exist forever unless it’s legally dissolved. This is a huge benefit that many other business structures, such as partnership firm, do not have. In the case of a partnership firm, the death of a partner leads to the partnership firm being dissolved.
Limited Liability
Members of a company enjoy limited liability. What this stands for is that if the company goes through losses or is wound up, the amount that the members and directors of the company owe is restricted to a certain amount; they cannot be held personally liable for it. An exception stands, however, in the case of unlimited companies where members agree beforehand to unlimited liability. Additionally, member or members of the company may also be held liable unlimitedly in case of malafide actions on their part.
Transferability
Companies enjoy easy transferability of ownership or shares. In case of a company, ownership is defined by the shares members own. These shares can be easily transferred by one party to another via a share transfer form. In case of public limited companies there are no limitations on who the shares can be transferred to; private limited companies may impose certain limitations, but there can never be a complete ban on transfer. This is why it’s often said that companies enjoy an ‘easy exit’. What this means is that a company’s owner can easily sell it off without the company getting disrupted.
Owning property
As a company is a separate legal entity, it can own, sell and acquire property. This property is of the companies, not of its owners or shareholders.
Legal Actions
The same way there can be legal proceedings against a company, a company, as a juristic person. Can take legal action against other people or organizations, and take advantage of legal redressal mechanisms. A company can also get into contracts with other individuals and organizations.
Credibility
Every registered company is required to share a lot of its information with the MCA. Which is also verified by the Registrar of Companies. This gives a company a lot more credibility in comparison to other business structures.
Raise Equity
A company can get investment from venture capitalists, private equity funds, etc. A company is the only business structure that can receive investment in this manner. This feature of a registered company makes it extremely preferable for entrepreneurs; it lets them start their company without having to themselves provide all the capital.
Borrowing Capacity
A company can raise and borrow funds from the public. It can issue and accept debentures as well as get financial assistance from banks and other financial institutions.
Foreign Investment
A registered company is eligible for foreign direct investment; most companies under Indian law can receive up to 100% FDI without needing government approval. Companies in India are the only business structure that enjoy this. Getting investment from foreign entities can also be extremely helpful for businesses that want to expand internationally.
Tax Benefits
A private limited company can enjoy several tax benefits. Many of its expenses come under “allowable expenses”, such as the director’s salary, preliminary costs. Such as the expenses for Memorandum of Association (MoA) and Articles of Association (AoA) et cetera. Essentially no taxes have to be paid on these amounts.
Conclusion
While a company is a unique business structure with many benefits. Neverthless it can be confusing to figure out if it’s the business structure to go for or how to register a company.
Here are some additional pointers to keep in mind while considering registering a company:
- A company requires a minimum of 2 owners for registration
- Companies undergo statutory audits.
- Companies have a lot of compliance requirements compared to many of the other business structures.
Whether a company is the right business structure for you can only be decided by you. We hope that our article can help you make this important decision.
