Why Is The Company Registration A Good Idea?
If you wish to grow your existing business or start a new venture altogether, getting it registered under a name is a crucial step. Unfortunately, many companies fail to get this process done on time and ultimately end up paying penalties and fines. Earlier, the process of company registration in India was quite cumbersome and lengthy. But due to the latest developments and introduction of the internet, it has been simplified a lot. There are many benefits of getting your company registered under the Companies Act, 2013. It is hereafter a mandate to register every corporation in the country.
Limit Personal Liability – Generally, a sole trader is legally responsible for all the losses and debts. In other words, in case of any default, the sole trader will be held personally liable to repay all the losses to the investors. Registering the company as per the law will differentiate the personal assets of a businessman from its company’s assets.
Minimize Tax Liability – Registering your company will help you in minimizing your tax liability. There are many developed countries that lay a higher tax on individuals and lower taxes on companies. Unregistered companies will be considered as individuals. However, registered companies will enjoy a tax rebate on education, training, maintenance, advertising, and so on!
Easy Transferability – Sharing or transferring of ownership is one of the biggest hurdles of an unregistered company. On the other hand, registered companies are considered as a separate legal entity with liabilities and assets distinct from the promoters. This makes transferring the rights or ownership quite easy for the owners.
Bank Account – Unregistered companies often face many problems in opening bank accounts. This is because they don’t have any legal proof of their existence. On the other hand, a registered entity has proof of its existence through tax registrations. This makes the bank account opening process quite simple for them.
Business Funding – Investors are never willing to invest in a company that is not legally registered under the Companies Act, as a lot of things are at stake. Therefore, companies are advised to get themselves registered as this is the best method to raise capital or equity funds in the name of the company.
Buyer Criteria – The majority of the companies follow supplier selection criteria that prefer to do business with a legally registered company only. This is the biggest advantage of registering a business entity as it is the gateway to participation in tenders and interact with prospective customers and buyers.
Prevent Conflicts – The partners of a registered company will never face any conflict issues. This is because their ownership and liability are limited to the number of shares they own. All this is legally backed and not just written or verbal promises. In case of a dispute, share and profit allocation are quite easy and simple.
Following the right process for company registration in India is one of the best ways to expand your business and ensure its success. Lower tax rates will give you an opportunity to invest your funds in the right business strategies.