Advantages of Company Incorporation in India

LLP Public Profile

We at Muthirai understand by experience that setting up a company requires going through various complicated and strategic business and legal procedures. Registration of a company is a decision of a lifetime; we appreciate this point very well. You as an entrepreneur could depend on us to get your company registered in the most economic and easy way. In addition we consider it our privilege to help convert your already existing proprietorship or partnership firm into a private or public limited company.

Advantages Of Company Incorporation In India

The formation of the company is very important and a company as a form of business organization has definite advantages over other forms of organization like sole proprietorships and partnerships.

Companies benefit from limited liability

The formation of a company brings along with it the limited liability to company shareholders and directors; a definite advantage over sole proprietorships and partnerships that carry a risk of attachment of personal properties of the proprietor or partners in case of business losses. In case of insolvency only the company’s assets can be attached and the directors and shareholders have no personal liabilities. 

Companies; private or public have their own legal status/entity

Companies established by the Company Law have a separate legal entity that is separate from its members and directors; the reason why private and public companies are taken more seriously than proprietorship or partnership firms. Business dealings with companies give both suppliers as well as customers a sense of confidence and faith as opposed to proprietorship/partnership organizations.  This proves an advantage to attract workforce and also motivate employees.

The perpetual succession of companies is a major advantage

The entry and exit of the directors or members does not necessarily affect the company’s existence; an incorporated company remains alive till it is wound up according to provisions of law. A company once incorporated remains alive unless and until it is wound up by complying with the provisions of Law.

Raising capital from public is allowed for companies

Public limited companies have the advantage to be able to raise funds from the members of the public through issue of shares and fixed deposits; private placement of shares and deposits help private companies also. 

High project costs and risk factors favor companies to get easy financial aid

High-tech or heavy capital outlays on projects favor companies; banks and financial institutions favor both private and public companies for sanctioning loans where the financial stakes are high.

Companies enjoy better avenues to borrow funds

Companies can more easily borrow money by issue of secured and unsecured debentures, deposits from public, banks and financial institutions; there is more trust in lending money to companies than partnership or proprietary firms.

Ownership of companies can be easily transferred

The ownership of companies can be easily transferred as a going business with transfer of shareholdings to the purchaser. Facilitating easy transfer of management and ownership, this saves a lot of money spent on stamp duty and the time of the promoters.   

Sharing of dual relationships is a prominent advantage:
Companies can make effective and valid contracts with any or all of its shareholders/directors; this enables a person at the same time to be a director of the company and receive remuneration and also receive dividend as a shareholder. Similarly a person can be a creditor and earn interest, and also supply goods from his own family business or receive rent as a leaser.

Companies get tax benefits

As opposed to income tax paid by sole proprietorship and partnerships, companies pay corporation tax on their taxable profits after a wide range of allowances and deductibles that are offset from the profits of the company.



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