If you are thinking of starting a business, then it is better if you register it as a private limited company. Though people generally shy away from it because of a much complex registration process, you must understand that being registered as a private company gives you benefits which you will never get in other forms of business ownership, whether it be as a sole owner or as a partner. Below, we look at three such advantages.
1- Large Borrowing Capacity
When you register your business as a private limited company, your ability to raise funds will expand. In addition to adding more capital via the equity shares, your business will also be able to raise funds by issuing debt instruments like debentures, bonds etc. In addition, banks and other large lending institutions usually have a preference to fund companies rather than sole proprietors or partnerships. Plus, you can raise these funds at lower interest rates. So, if you have a big dream which will require large scale funding, then a private limited company is what you must start.
2- Protect Personal Assets
If you operate your business as a sole owner or through a partnership, and if a situation occurs where the business suffers a huge loss and you have to shut it down, then your personal assets will also be at risk. When the business is unable to repay all the debt it has taken, the creditors will have the full legal right to recoup the debt from your assets, including your very home. However, registering the business as a private limited company helps you avoid such issues. In case of a wind up, only the assets of the business can be taken away by the creditors. They cannot touch your personal assets.
3- Assign Shares To Employees
When you run a business, one of the main drivers for its success will be the enthusiasm and the performance of its employees. With a sole proprietorship or a partnership, you can only reward your employees by paying bonuses and such limited things. In contrast, when you are a private limited company, you can issue your employees with stock options which makes them own a part of the company. And as the value of the company rises, the stock values held by the employees also increase. As such, they are more likely to be committed to the success of the business, since their monetary benefit is tied directly to the progress of the company.
The Bottom Line:
So, consider registering your business as a private limited company. And if you need any assistance with it, you can seek the help of the QuickCompany company registration service, which is an easy and swift way to get your business registered as a private limited company without stressing yourself out.