Beginning with your start-up? You may have already come across a lot of those who have advised you against registering your company or signing up for sole proprietorship to save the cost and the time consuming procedure of being listed down as a private limited company. We are here to tell you things differently.
According a research, it is seen that 93 percent of start-ups in India are registered as private limited companies. Looking for one solid reason? We will give you three. Stay tuned!
The Zero Capital Company– Before undertaking the act of registering your company this is one thing you must be aware of. Earlier on, there was a rule that to lay the foundation of a private limited company, the shareholders had to pay INR 1 lakh as minimum subscription amount. This is one factor that would often discourage start-up owners, thus making them prefer sole proprietorship to private limited. But this criterion has been dispensed with by the Government. You can literally begin your company with ‘Zero Capital’ and build up your wealth as you go.
The limited liability factor– As opposed to the sole proprietorship status of your company, being a private limited company can be a much more feasible option. Let’s consider the long run. If the unfortunate event of winding up occurs, sole proprietorship leaves you with unlimited liability. Which means, in this case the personal property of the owner will be liquefied to pay off the debts. But under the Company Law, 2013 if your company is registered as a private limited company then you (as the owner) and your company (the business) is considered to exist as two separate legal entities and excluding a few instances, the personal property of the owner cannot be subjected to liquidation.
Attracts Funding– In sole proprietorship, the owner is the sole person responsible for single-handedly running the company. But in case of private limited company there can be multiple owners in the form of shareholders. Such a structure seems to attract investments, which is the life line of a start-up in the initial days.
To sum it up, registering itself as a private limited company is the best and the safest option for your start-up. It has no minimum requirements in terms of capital, it provides the business owner with the protection of limited liability, it requires only two directors and shareholders to begin with and that too both can be the same person plus it provides for a structure that will attract capital investment. So let’s see, are we missing out anything?
Oh yes, just one more thing. The actual act of registering the company, which did you know, could also be done online? Needless to say, the online company registration process is a lot more hassle free. All you have to do is submit your documents and shell out the cash required for the process. To know more about online company registration, click on the following link quickcompany.in