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India provides the flourishing ground to emerging start-ups and young entrepreneurs. Many start-ups have been coming out day-to-day as India has the world’s 3rd largest number of start-ups. This would surely impact the start-up ecosystem’s socio-economics, thereby creating thousands of opportunities for new start-ups. Before going further, it is important to register your company.
Suppose you choose a private limited company as your business form then it is mandatory to undergo a process of company incorporation in India as per the companies’ provisions, 2013, under the ministry of corporate affairs.
It is quite unfortunate to know that India is in 2nd rank when it comes to the highest number of unregistered businesses. Registering your business would give you a lot of benefits. Establishing a company can be comparatively easy and stress-free. Not only that, registration of the company would give you legal protection as well. By registering your company, your business can initiate its operation smoothly and efficiently with compliance with Indian laws.
In order to start a new business in India, you must first choose a business form. To run a company in India, one to choose from a variety of legal entities.
- Private Limited Company
- Limited Liability Partnership(LLP)
- Public Limited Company
- Section 8 Company
- One Person Company(OPC)
- Non Banking Finance Company (NBFC)
- Sole Proprietorship
You would be able to restrict your personal liability
Running and operating a business involves more risk as you will be the only person who is going to be responsible for all the aspects of the business, including losses and debts. Possessing the limited liability protection would make sure that you can take up the gauntlet without the fear of losing your savings or personal assets. One of the fundamental advantages of a registered business (it could be LLP-limited liability partnership, OPC-one-person company, private limited company) is that it offers limited liability protection to its members.
It would become easy for you to depart
In the registered business entities such as a company or LLP registration (limited liability partnership), the business will be considered a separate legal entity with liabilities and assets separate from its promoters. Thus, sharing or transferring of the ownership of a registered business would become easy, relatively. While on the other hand, proprietorship one cannot transfer as they are an extension of the proprietor.
Infusing the capital to your business requirements
As a company, your capacity to catch the investors’ eyes and infuse money for your business would be easier. Company registration would allow you to borrow and acquire debt and sell shares and infuse equity capital as most financial institutes and banks favour lending to registered business entities. Thus, it is highly recommended to register a business if you have any plans for infusing debt or equity funds in your business’s name in the foreseeable future.
Strengthen your brand image of the business and improve the relationship with your suppliers and customers
Company registration is also a must for your future dealing with your third-parties. Many giant business houses with a supplier selection criterion tend to choose to do business with a registered business entity compared to those who are unregistered business entities. With parties signing an agreement with the company in place of the owners. These are some of the benefits that your business would get If you register your company the earliest.
Shares are treated as movable property and can thus be easily transferred from one individual to another. This feature provides shareholders with liquidity. Members have the option of cashing out their shares at a certain time. The shares of a public company can be freely exchanged. A private limited company’s share transfer is less common because it is tightly owned, but it is not forbidden.
Expertise and Efficiency (the two E’s)
Since the company’s management and ownership are separate, specialists in the field may be named to each of the company’s functions. As a result, transparency improves. Because of the abundance of money, it is possible to provide competitive pay packages and retain the best talent available.
The buzzword these days is entrepreneurship, and when choosing a business model, an entrepreneur must consider the different benefits and risks involved. A viable business form goes a very long way toward determining the company’s future. Incorporating a business as a corporation offers much more stability and legitimacy than most business structures.