Are you thinking of taking the entrepreneurial leap in India? If yes, registering your business as a Private Limited Company could be an excellent choice. Here in this guide, you will find about multiple benefits of registering a Private Limited Company, a popular business structure in India. You might be surprised to know how it can enrich your entrepreneurial journey. Let’s begin
It Makes Business A Separate Legal Entity
The biggest advantage of setting up a Private Limited Company in India is its recognition as a separate legal entity. This means that the company you form is distinct from its owners. It holds its own legal rights and bears its own legal obligations. Essentially, this unique feature makes it possible for a company to own assets, incur debts, sign contracts, and employ people in its own name.
A separate legal entity status shields personal assets from company liabilities. For instance, in case the company lands in financial trouble, the personal assets of the company’s owners are not at risk. This is a significant advantage for entrepreneurs as it offers a safety net for their personal wealth. So, whether it’s about signing a new deal or managing business debts, this separation provides a layer of protection.
Easy Ownership Changes With Uninterrupted Existence
A Private Limited Company enjoys perpetual succession, meaning its existence is uninterrupted irrespective of the changes in its ownership or management. The company will continue to exist until it is legally dissolved.
This uninterrupted existence assures the stakeholders of the stability of the company. The exit or death of any member doesn’t affect the functioning of the company. This guarantees business continuity, providing much-needed assurance for employees, shareholders, and creditors. This feature makes Private Limited Companies a reliable option for both budding and established businesses.
Limited Liability Of Shareholder
In a Private Limited Company, the financial liability of each member or shareholder is limited to their shares. This implies that if the company suffers from any loss or faces any financial hurdles, the personal assets of shareholders remain unaffected.
Limited liability serves as a shield, protecting the shareholders’ personal properties from the risks and losses of the business. Even if the company goes bankrupt, the personal assets of the shareholders are safe. This can bring a sigh of relief for entrepreneurs who want to minimize personal financial risk while they fuel their dreams.
Gives Free and Easy Transferability of Shares
Shares of a Private Limited Company can be freely and easily transferred from one person to another. This ease of transferability allows for flexibility and convenience in ownership. Whether it’s for bringing in fresh investment or for succession planning, this feature can be very handy.
Additionally, the transfer of shares does not disrupt the business operations in any manner. The process is straightforward and only requires the filing of a share transfer form and share certificates. This smooth transition promotes business continuity and growth.
Acquire and Own Property
As a separate legal entity, a Private Limited Company can acquire, own, enjoy, and alienate property in its name. No shareholder can stake a claim upon the property of the company as long as it exists. This autonomy helps in the consolidation and growth of the company’s assets.
It’s worth mentioning that a company’s property is not considered to be owned by its shareholders. This means that a shareholder cannot make any claim on the property of the company during its existence or in any scenario whatsoever.
Capacity to Sue and Get Sued
A Private Limited Company, as a separate legal entity, can sue and be sued in its own name. This ensures that any contractual dealings or obligations entered into by the company are enforceable by or against the company itself, not its members. This benefit upholds the independence and self-sufficiency of the company.
Dual Relationship For Businessperson
In a Private Limited Company, a person can be both a director and a shareholder, maintaining a dual relationship with the company. For instance, you as an individual can provide a loan to your company and earn interest. At the same time, you can also draw a salary as a director. This dual relationship offers a distinct advantage in business operations.
High Borrowing Capacity For Your Business
A Private Limited Company enjoys high borrowing capacity. Banks and financial institutions prefer to extend large financial assistance to Private Limited Companies. This ease of access to funds can be crucial for the growth and expansion of your business.
Conclusion: PVT LTD Company Brings Many Of Benefits
Registering a Private Limited Company in India offers numerous advantages such as separate legal identity, uninterrupted existence, limited liability, free and easy transferability of shares, capacity to own property, sue and be sued, and dual relationship. Its increased borrowing capacity can give your business the much-needed financial thrust. So, gear up and let your entrepreneurial journey begin with private limited company registration services! Further, you can also read this amazing guide where we provided step by step guide to register a private limited company.
