Starting a business is one of the most interesting and rewarding experiences of anyone’s life. Choosing the type of company is one of the toughest decisions to make. A Private Limited Company is more beneficial as compared to other forms of companies. A private limited company is the most useful business model. The owners of the business hold all shares of the company. Shareholders may operate the business themselves, or hire a director of a company to manage the company on their behalf. Registering a private limited company gives protection to personal assets, financial assistance, access to more resources, and greater tax cuts.
Some major benefits of a private limited company are:-
- Separate legal entity:- It provides immunity to the owner’s personal property or assets in case of bankruptcy. On the company incorporation, it becomes an independent legal entity, meaning it can sue or own assets separate from the company owner. It is not affected by the status of its owner i.e. inability to continue or death of the owner does not obstruct the proceedings of the company.
- Perpetual succession:- One of the benefits of private limited company registration is to give you the freedom to easily add or remove members of the company. There won’t be any harm to the company’s existence. Helps in the smooth working of the company.
- Investors:- Investors are attracted to invest in a private limited company. As there are less chaos and confusion. Private limited companies are also flexible in terms of relation with the investors.
- The number of members:-Private limited company registration requires a minimum of just2 members.
- Global expansion:- If you want to expand your company and take it to a global level, a Private Limited company is your best option to do so. Private limited companies are the only type of companies that allow 100% Foreign Direct Investment in the international market. This means any foreign entity or a foreign person can invest in your company without prior government approval.
- Capital expansion:- The maximum number of shareholders allowed is 50.
- Complete access to the whole company:- The Directors are also usually the main shareholders of the Company. Hence both the ownership and control of the business remain in their hands. Best benefit among the benefits of a Private Limited Company
- Prospectus:- Prospectus is a detailed statement that must be issued by a company that goes public. However, private limited companies do not need to issue a prospectus because the public is not invited to subscribe for the shares of the company.
- Prestigious profile and confidence:- Having ‘Pvt Ltd.’ at the end of a company name can add standing and prestige. This brings up the confidence of both employees and employers. A private Limited company creates a professional image and boosts business value. They are viewed as more established and credible over the sole traders.
- Employee stock option program (ESOP):- IT is a source of extra motivation beyond salary. As a result, employees will also have a vested interest in the success of the company.
- Tax-Breaks:– Private limited companies also enjoy tax advantages. Private Companies are only taxed on their profits. This gives Private companies Tax Advantages over sole proprietorship and partnership registration.
Advantages of a private limited company
Auditing Requirements of Private Limited Company