Why Private Limited Company always wins the battle over other business formation?

Private Limited Company


One of the greatest experiences in a person’s life is starting a business and this experience starts with the great decision of selecting the type of business entity for the business. This important decision must be made after consulting a professional. The entity should be chosen in such a way that it supports the business. There are many types of business but the most common are Private Limited Company, Limited Liability Partnership (LLP) and One Person Company (OPC). Among these as well, Private Limited Company is the most successful form of business.

Here are a few reasons why private limited company always wins the battle over other business formations –

  • A Private Limited Company is a separate legal entity in the eyes of the law
  • Funding is very important for starting as well as the growth of the business. A startup can be self-funded or it can be funded through equity funding or through loans. Equity funding turns out to be an important source of funding during the growth of a business. Sole proprietorship and LLPs cannot issue shares and therefore they do not attract investors. Hence a Pvt Ltd Company is ideal for growing business.
  • A Pvt Limited Company is accompanied by various tax deductions. A sole proprietor and a partnership have to pay income tax whereas a private limited company has to pay Corporation Tax on its profits. There are many tax deductions applicable to these corporation taxes.
  • The liability of a member is limited to their assets in the company. Thus the members are protected against any losses incurred by the company. In a Private Limited Company, a member’s personal assets are safe.

A Pvt Ltd Company has an uninterrupted existence. The existence of the Company is not affected by the entry or exit of any of its members.

Related Article- OPC/LLP/Private Limited Company – Which is good for a startup?



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