Why Should You Register Your Business As A Private Limited Company?
India is all about the growing number of Entrepreneurs today, and while it seems a new trend and everything exciting, people forget to plan the type of business entity. It is only at the time of Company Registration in India that Entrepreneurs and budding businessmen and women start thinking of the different kinds of business entities and which one to choose. Unfortunately, because of the lack of knowledge and planning, an important decision is kept for the last minute. It goes rather unrealized until there is a need. But, Company Registration in India cannot be an uninformed decision; there are many factors to consider before going about it.
Did you know that more than 90% of the companies in the country are registered as Private Limited? While there are other types of business entities as well that a new business can be registered as this particular type shows to be clearly one of the top favorites. Youth today comes off as big-time rebels and feel that everything that their previous generations did was wrong, and they have to take a better way, preferably unique. However, why would a mass majority trust something blindly like a herd?
Benefits Of Private Limited Company Registration:
The numbers of Private Limited Company registrations are a clear indication of the benefits that come with the business entity. However, the next section highlights them for you to make a better-informed decision.
- Limited Liability:
It is one of the most important factors of a Pvt. Ltd. company that saves the members from being personally affected by the fall but not the growth of the company. If the company incurs big losses, more than its assets, the owners or the members, personal assets remain untouched. They are not required to liquidate and liquefy their personal properties to pay off the debts and losses the company makes protecting the individual investors.
- Undying Business Entity:
A Pvt. Ltd. company, once registered, is considered as an individual under the law. It remains unharmed under different situations and survives unless the company is winded up following a legal procedure. It means that the status of the members do not impact on the life of the business. So even if the owners pass away, go bankrupt, or have to liquefy assets, a Pvt. Ltd. company remains unaffected and continues to live till someone closes it.
A Pvt. Ltd. company requires as little as two shareholders for registration, unlike Public Limited that requires seven. Aside from the number of shareholders, it is also the advantage that the shareholders get that becomes important. The shareholders, owners, and founders, in short, all the company members get the power to sell off or transfer their shares anytime and to anyone.
Entrepreneurs may not be willing to trust many people with their idea and business, in the beginning, to let them have ownership of it. The lesser number of members, which are two, in this case, helps many Entrepreneurs. However, with time, growth, and scaling, one may want to add up the numbers of shareholders in the company. The minimum of two as a requirement and a maximum of 200 members suits the company's different requirements at different times. In this case, along with individuals, even a corporate entity can become a shareholder of the company.
While the benefits of a Private Limited Company registration are enough to attract the Entrepreneurs, it has similar effects on investors, which is why getting funds is easier for Pvt. Ltd. Company.