What are The Advantages of Incorporation of a Company?
Confused about registering your business? Looking for the advantages of incorporation of a company? This article is perfect for you.
Do you know as per the latest report by inc42.com; an average of 15,472 startups got recognition under the Startup India programme launched by our Prime Minister.
Today we all want to work for our own business instead of working for any other person’s company. This is the reason we all are witnessing the growth of startups in our country.
“So you got an amazing idea for your startup, you came up with the perfect plan to grow it into a successful business and you tried to pitch your idea to a few investors also but they didn’t show much interest so what’s next? “
If you want your potential investors, customers, and employees to take your startup seriously then the first thing you need is to incorporate your company legally. An incorporated startup has more authority and trust as compared to an unregistered startup.
Our Article is too long to read? You can watch our complete video on the advantages of incorporation of a company:
Following are 5 advantages of incorporation of a company that will help you to stand out:
Create a separate business Identity
If you register a company in India; your company will be declared as a separate legal entity. The following stakeholders can play a major role in the decision making of issues related to the company:
- Director: Person who will be managing and controlling the company
- Promoter: Person who actually initiated the setup of the company
- Shareholder: Person who has ownership of the company
Assistance in capital generation
You are going to need capital (money) to run your business. You will have two options to get capital:
First is equity capital; which means a person can raise funds through the public. Equity funding is a good option if you want to stay debt-free.
The second option is taking debt in the form of a loan or credit from a bank or private money lending company.
If you have a registered firm then in both cases you will get an upper hand. Your investor (both a bank or public) will found that you are actually serious about your startup and you have already declared it as a legal entity.
The incorporated company will exist no matter what happens to its owners, directors, shareholders, members, or employees. Moreover; if one of the shareholders or the owners wants to end the company that won’t be possible. One thing to note here is; sometimes the owners or shareholders together decide to end the company. In such cases, the company’s life comes to an end after deciding mutually.
Perpetual existence of companies is beneficial at the time of long term profit planning and growth strategy of the company. The efforts and hard work of all the members of the company can not go waste because one person decided to walk out.
Transfer of ownership of the company or shares smoothly
If a company is under proprietorship no one can transfer the shares or ownership of a company under any circumstances. But if it is a registered company then you can always transfer the ownership to another person legally by following the right procedure.
The shareholders also have the authority to encash their shares anytime they want. There are a few restrictions in a private limited company but in a public limited company transfer of share is an easy process.
When a person is a sole trader or a proprietor then all the liabilities of the company come on his/her head. Running a business under proprietorship can be risky. But on the other hand; if you are working as an incorporated company then you don’t have any liability on your head.
A company is a separate entity hence; no single person will get the responsibility or blame for any negligence or issue. Another important aspect here is; all the debts on the company can not be the debt of the owner, director, or shareholder.
Over to you!
We hope now you must have a clear idea of the advantages of incorporation of a company. If you own a startup and you want to register your company in India then we are here for your assistance.
The Corporate Hub has a team of skilled CS and CA professionals with amazing experience of working with all business niches. We understand the requirement of your startup or business and then we will recommend the right process for you. Moreover; We are here to assist you 24 * 7, 365 days. Whenever you need our support the team will be there to help you out.
Get in touch with us today and get a free quotation for your requirements.