Starting a company is always a good idea, anyone can decide to start a new business. Actually, before deciding, it is always better to go for research to understand the process and procedure to start a company.
Planning, Preparing, Registering, Launching, and establishing the business is the right way to start a business.
Starting a new business venture is an exciting journey filled with potential and opportunities.
The most important step in starting a company is registering the Company. Company registration is mandatory in India to run a business in the Indian market.
Meaning Of Company Registration In India
The process of registering your business with the appropriate authorities is referred to as “company registration.” It denotes that if you register as a company, you are granted formal permission to engage in commercial activity.
Earlier, company registration was a time-consuming and expensive procedure for startup founders, but with the development of the internet, it has become simple and important for business owners.
Business registration is required regardless of the size of the company and provides your business with legal protection. If you register your business, you open the door to a number of opportunities that are beneficial to your new venture.
A company is a type of business organization, which is made by law. It is usually an affiliation of persons, joined to undertake business organization, holding a different legal entity, perpetual succession, and a common seal.
It is a legal existence integrated under the Companies Act, 2013, or any other former acts, dominant in India.
Importance of company registration
There are numerous reasons why you need to register your startup as a company.
From giving your startup an edge in the market to assuring its legal protection and from lowering your tax burden to limiting liability, company registration is the stage in the startup world that serves your company all of these factors.
As mentioned, company registration is basic, easy, and affordable. Today most of the reputable companies in the nation are registered.
Benefits of registering a Company
There are a number of benefits of company registration. Apart from giving your startup a legal recognition and a legal right for you, it has several other benefits. Let us know about them. The following are the major benefits of Company registration for your startup –
1. Protection of Limited liability
The most important benefit of registering a company is the limited liability bestowed upon the company’s directors and shareholders. Limited liability is one of the greatest benefits of company registration.
As a sole proprietor or trader, you are solely responsible for all kinds of aspects of your business, including debts and losses. You can save your personal assets after registering your company.
Events like the failure of a business or any other lead to putting sole traders and partnerships in trouble. Directors and owners of the Company remain isolated in case of issues like a business failure.
2. Recognition as a legal entity
Company registration grants your startup a legal status or recognition under a particular jurisdiction.
It sets up the existence of the company separate from directors and the company members.
Registering your company apparently, helps your organization to grow its market and expand the business as the companies who are legally recognized are more preferred in the corporate world.
A company is a legal entity; any person can launch and establish it under the Act.
With a flexible and wide range of management designations, the company can easily attract a quality workforce and accomplish strategic motivation to employees.
3. Easy loan and business bank account
Another important characteristic of company registration is that it helps an organization to establish a business bank account and for an easy loan from banks.
A business bank account is one of the important assets of a company which is demonstrated by showing valid proof that your business is registered. Also one of the benefits of company registration is that you can get an easy loan from lenders and investors as you are a registered company.
If you register your business as a Company, you can enjoy all types of funds. Most banks and financial institutions usually prefer to provide large financial assistance to the company when compared with other forms of organizations like proprietary concerns or partnership firms.
4. Low Tax liability
The tax rates on an individual are higher than the tax rates on companies and small business units. Being a sole trader, you are in the same tax slab as an individual.
The companies and small business units are subjected to tax deductions for advertisements, repairs, maintenance, Research, and Education.
Registration of your startup is a company that does lower your tax burden. Organizations that are registered as a Company will pay Corporate tax on their profits.
It also holds a wider range of leeway and tax deductible costs which you can deduct against a company’s profits.
5. Establishing a reputation
A Registered company is always considered a reputable organization. Company registration is a process that enables you to set a mark of reputation among its customers and stakeholders.
Customers and clients are clearly the most important asset of a company, this is also why you need to register your startup as a company. It also helps to build Brand Protection.
Your brand identity is a valuable asset, and registering your company ensures that your business name is unique and protected. This prevents others from using a similar name, avoiding brand confusion and potential legal disputes.
6. Eternal Succession
Another important advantage of registering a Company is eternal succession. The existence of a company will remain the same, even if the directors may come and go and the shareholders may come and go.
Once the company is incorporated it remains alive till it is wound up by abiding by the provisions of the Law. The death, retirement, or disability of the director or any of its members does not affect the Company from continuing, irrespective of change in the memberships.
7. Cost and Risk Factors
If you are planning to go for high capital expenditure or hi-tech projects then it is always better and advantageous to go by registering your business as a company, as the financial stake involved in the hi-tech project is high.
Even Banks and Financial Institutions insist on registering the business as a company while approving business loans or financial assistance instead of going for some other types of organizations.
8. Easy Transferability
If you register a company, it is easy to sell the business as all you require is to change the entire shareholding rights to the Buyer and therefore it is easy to transfer the ownership and management by simple agreement. In this way, money, time, and importantly the big process of stamp duty are also saved in a Company.
9. Dual or More Relationship
By registering your business as a company form of organization, it gets the potential to make a valid and effective contract with any of its directors and shareholders. Apart from employment, the person also is in control of the company at the same time.
Like, a person can be a shareholder, creditor, and employee and can be the director of the company at the same time.
A person can benefit from all his roles for example: if the shareholder of the company is the creditor, he/she can receive dividends and can earn interest.
Conclusion
If you are operating a start-up, registering a company is the first and most reliable procedure. Registering a company is the first and certain process if you are running a start-up. Apart from giving several benefits and owing great importance, company registration is one of the key stages. It lets you hold power in the market.
If you are planning to establish a start-up or planning to register a new company and require more information on this matter, you can contact us and ask your query digital Seva Portal one-stop solutions for all your digital needs.
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