Benefits of Private Limited Company
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There are many benefits of Private Limited Company as compared to other forms of companies. A private limited company is the most adapted business model. The owners of the business hold all shares of the company privately. Shareholders may operate the business themselves, or hire directors to manage the company on their behalf. Registering a private limited company gives protection to the personal assets, financial assistance, access to more resources and greater tax cuts.
- Separate legal entity provides immunity to the owner’s personal property or assets in case of bankruptcy.
- The feature of perpetual succession gives you the freedom to easily add or remove members in the company. There won’t be any harm to the company’s existence.
- Investors are willing to invest in a private limited company.
- Banks easily sanction loans to private limited companies.
- Registration of a private limited company requires a minimum of just 2 members.
- If you want to expand your company and take it on a global level, Private Limited company is your best option to do so. Private limited companies and 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.
- Scope of capital expansion as maximum number of shareholders allowed is 50.
- The Directors are also usually the main shareholders of the Company. Hence both the ownership and control of the business remain in their hands.
- Employee stock option program (ESOP) is a source of extra motivation beyond salary. As a result, employees will also have vested interest in the success of the company.
- The private Companies are only taxed on their profits. This gives Private companies Tax Advantages over sole proprietorship and partnership registration.