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8 Reasons Why You Should Opt For A Private Limited Company

By Author: Keval Shah
Total Articles: 1

You may wonder that why should one opt for Private Limited Company when there are other options like sole proprietorship and One Person Company. In order to answer this particular question a few advantages of Private Limited Company are mentioned below which might convince you to start your own Private Limited Company.
1. Separate legal entity
A Private Limited Company is a legal entity separate from that of its members and is a juristic person established under the Companies Act. Private Limited Company form of organization has wide legal capacity and can own property and also incur debts. The death, insanity, incapacity or insolvency of its shareholders or directors does not affect the existence of the Company in any way.

2. Limited liability
Private Limited Company is an independently taxed and accountable business entity. The liability of the shareholders is limited to the company shares and assets. In case if the company incurs any loss, the shareholders will not suffer beyond their unpaid share capital. It protects your personal assets.

3. High market value
Private Limited Company is registered under Ministry of Corporate Affairs (MCA), hence it has high professional value. When a business is registered with MCA, there is proof of its existence. Now a days, credibility and trust matters a lot for stakeholders while dealing with businesses.

4. Tax benefits
Paying tax is one of the major concerns while running a business. In case of Private limited Company only the profit gained by the company is subjected to tax.

5. Resources and Funding
Initial funding and investment is prime factor for company set-up. Private limited companies tend to raise fund easily. Funds are essential for growing and maintaining the business. Banks easily provide loans to the private limited companies. Venture capitalists and angel investors prefer to fund private limited companies.

6. Creation of Brand value
Whenever an establishment is registered as a private limited company, the unique name of the company also gets registered. The registered unique name is then protected by the intellectual property rights. Hence the company will have its own unique identity and will be separated from other businesses.

7. ESOP (Employee stock option programme)
Private Limited Company has an option of ESOP, where company issues shares to its employees in order to motivate or reward them. LLP or Sole Proprietorship doesn’t have the option of ESOP.

8. Dual Relationship
When a Private Limited Company is formed it is possible to make a valid contract with any of its members. A person at the same time can be a shareholder, director and also an employee of the company.

Afleo offers complete end to end Private Limited Company Registration.

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