In the current time, many young entrepreneurs are coming up with unique business ideas and are introducing fresh ideas and venturing new business sectors. They have great entrepreneurial skills but what they might lack is the legal knowledge and understanding the regulating laws.
Such startups play a vital role. But, what such entrepreneurs lack is the understanding to choose a specific business model most suitable for their business type. Business models include sole proprietorship, partnership, limited liability partnership, company etc. In this article we will try to explain in brief the benefits of company registration in India over any other kind of business model.
Following are the benefits of Company Registration:
- Separate Legal Identity
Once a company is registered it acquires a separate legal entity from that of its owners/ shareholders. All the business related transactions are done in the name of the registered company and no personal interests of the shareholders are involved in the same.
- Fund Raising becomes Easy
A registered company with good track record portrays its credit worthiness and makes it easier for it to raise funds. There are multiple ways a registered company can raise funds like equity shares, preference shares, debentures etc.
- Management is different from the Board
In unregistered businesses mostly owners are same as the management which sometimes creates conflict. In Companies management is different from actual owners, however same people can be appointed on the same post. this helps in reducing the conflicts.
- No Burden of Unlimited Liability
One of the most important features of company is that its liability is limited. The shareholders are not required to match the unlimited liability requirement as is the case with partnership firm. Their liability is limited till the unpaid amount of the subscribed shares.
- Can be easily Transferred
As company has a separate legal identity it is easily transferable through transfer of shares and ownership with it.
