When you start your entrepreneurial journey, one crucial decision that often comes up is whether or not to incorporate your business.
So, it is compulsory for you to understand that turning your business into a legal entity not only provides security but also sets the stage for growth and success.
Let’s learn all about the benefits of Incorporating your business through this article.
Easily Generate the Capital & Funds
Incorporation or the Company Registration helps companies to raise money from the public.
This is because a company is considered more reliable when it is incorporated.
The company can then use this money to grow and develop its business.
You get separate legal entity
A company is a separate legal entity from its owners and managers.
This means that the company’s debts and liabilities cannot be paid by the owners or managers with their personal assets.
Limited Liability of Owners
Limited liability means that the owners of a company are not personally liable for the company’s debts and liabilities.
This means that the owners’ personal assets cannot be taken away to pay for the company’s debts.
In a company limited by shares, the owners’ liability is limited to the amount they have invested in the company, which is the amount they paid for their shares.
For example, if a person buys 10 shares of Rs 100 each, their maximum liability is Rs 1000.
In a company limited by guarantee, the owners’ liability is limited to the amount they have agreed to guarantee.
This amount is usually set out in the company’s articles of association.
Limited liability is a major advantage of forming a company.
It makes it more attractive to investors, as they know that their personal assets are not at risk.
This can help the company to raise more capital, which can be used to grow the business.
Transferability of shares
Shares are a unit of ownership in a company.
You can buy and sell shares easily, just like any other property.
This means that you can easily sell their shares if you want to, or you can buy more shares if you want to increase the ownership in the company.
The transferability of shares is a major advantage of forming a company.
Expertise and efficiency
The management of a company is separate from its ownership.
This means that the company can appoint experts in each field to manage the company.
This can lead to improved efficiency and expert decision-making, as the company will be managed by people who have the necessary skills and experience.
Necessary Documentation for Private Limited Company Registration
Private Limited Company Registration is the most common and popular type of business incorporation. Here is a brief overview of the different paperwork that entrepreneurs are required to present to the Ministry of Corporate Affairs (MCA) for the purpose of Private Limited Company Registration :
- PAN cards for all directors
- Address and identification verification for all directors: This could include documents such as Passport, Aadhaar card, Driving license, Ration card, and Voter’s ID.
- Evidence of business premises or registered office ownership: This encompasses documents like property registration certificate, lease/rental agreement, landlord’s authorization, utility bills (electricity, gas, water), or property tax receipts.
- Digital signature certificates for all directors
- Completely filled SPICe+ application form
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