For doing business there are many way but every business registration type have their own pro and cons. So even in Company there are several things which are in favor. So we analyses 5 benefits of company registration.
Separate legal entity: In the eyes of law, Company is separate from the owners of the Company which means company comes in existence with the operation of Law and can be end with the power of law. Company does not relate with the life of the owners. Owners may come owners may out, but company runs forever.
Freely Transfer of ownership: In case of proprietorship there is no option to transfer business and all business related documents to any other persons because all registration is with the name of the owner of the proprietorship firm. But in case of the company its very easy to transfer the shares of the company, and the person holding the share of the company is the real owner of that company.
Transfer of share with done by creating share transfer deed and payment transfer from one person to another person. However there are little restrictions on the transfer of the shares of private limited company
Limited liability of company: In every business type (Except LLP) there is unlimited liability of the owners. In case of any business loss, there owners is liable to pay the loss to outsider of business even from the personal property. But in case of company there is no such rule. Company is liable for outsiders up to the amount can be realized from the company, which means no one can claim their money from the shareholders or the directors of the company
However in case of cheating done but the director or the shareholders of the company then loss amount will be charge from the specific director or shareholder.
Borrowing Capacity: A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Capacity to sue and be sued: To sue means company can sue any person for their rights just like any other individual; a company being an independent legal entity can sue and also be sued in its own name.
