Forming a Private Limited Company Has Many Benefits
A private limited company is a business entity that is formed with a minimum of two directors and two shareholders or members. Opting for the right structure is vital as it can have permanent tax and legal consequences on your business. You have to choose a business structure based on some considerations. These factors are the type of business you are doing, the protection you need for your assets, tax implications, costs of formation and administration, etc. It is best to consult an expert before making your company a private limited. So that they can consult you how it can benefit you and maximize your gains.
Advantages of a Private Limited Company
Forming a private limited company gives benefits to your business, which other entities, like sole trading or partnership, cannot provide. They are:
- A company is a separate legal structure. A private limited company is an established legal entity under the Company’s Act. When you form such a company, it is separate from the management and its owners. It can incur debts, enter into contracts, employ people, have its bank account, and even have a seal in its name. The actions of the company are not the responsibilities of the owners. Unless they were part in the action with some fraudulent intention.
- The owners have limited liability: One great advantage of a private limited company is that the shareholders do not become entirely liable for all the debts and obligations. They are responsible only up to the unpaid amount on their shares, or the sure amount if it is a guarantee company.
- Permanent existence: Another benefit is that the change of its members/shareholders will not impact its existence. Death or resignation of its members will not affect Its continuity. The company’s existence only terminates if it is liquidated by law.
- There are more opportunities for finance and business expansion. Professionals provide certifications when you form a private limited company legally, then your brand value increases. You get more options for raising finance from external organizations like banks or other financial institutions. Since there are more members, you can raise finance from internal sources also. It also enables you to tap new opportunities in the market and expand your business.
- Ease in the process of formation: Two is the minimum number of shareholders and director needs for forming it. The shareholders may act as directors of the corporate. It makes it very easy to start.
- A company can own assets: It can hold assets like property in its name. The shareholders do not have any rights over the company’s property.
- The right to carry legal proceedings: A private limited company is an independent legal entity and can undertake legal actions in a court of law under its name.
- Increased credibility: When you form a private limited company by all the legal requirements, your business becomes more credible to investors. As a result of your improved standing, you attract more investment opportunities.
- Better taxation benefits: It enjoys better taxation privileges as compared to other business structures.
A private limited company is a perfect structure for establishing a flourishing business. 3E Accounting will support you through all the processes of setting up your company. We will help you with the business registration process, the preparation of relevant documentation, and all other legal formalities needed for the formation. Get in touch with our team. We will be more than happy to assist you in setting up a private limited company with quick turnaround time.