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Why Private Limited Company Is Best For Startups

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The Startups now a days are the most favored business form in india . the governement of india time to time are coming up with new and attractive schemes for the growth and development of startups In India.

The Government of india to promote startup In India has introduced over 50 startup related schemes in past few years in the country. The government of India has introduced schemes like The Venture Capital Assistance Scheme, Performance & Credit Rating Scheme, Raw Material Assistance, Revamped Scheme Of Fund For Regeneration Of Traditional Industries,Single Point Registration Scheme ,Scheme For Promotion Of Innovation, Entrepreneurship, And Agro-Industry etc focusing on startups in india.

Therefore, Opening a startup business in India can be a good option for those who are looking for growth and wealth creation. Benefit of starting a starup business is that you dont require big financial resources and big infrastructure you can start with less resources. Acquiring the funding for business is easy in case of startup Business.

Register a startup In India first step is incorporating a business , In incorporating a business , you need to make a choice of business entity that you will choose as a business structure. So in in this guide we will discuss why to choose private limited company registration for a startup business.

A private limited company is a very prominent form of business among investors in India. These companies are privately held by the people and is the most favored business organization in India. For the startups to have a strong foundation and raise finances for business operation , this form of business entity is a feasible option.

Features –

● Atleast 2 and Atmost 200 members are required for Private limited company
● There is No requirement for minimum capital
● It Should have a minimum of 2 directors
● The word Private Limited or Pvt Ltd is added after the name of the company.

Reasons to choose private Limited company for a startup

● Securing funding for a business from angel investor or VC Firms becomes easy if your Startup is registered as a private limited company.
● The liability of the shareholders of a Private Limited Company is Limited to their Shareholding and if the Private Limited Company makes a Loss, shareholders won’t have to pay the Loss beyond their Unpaid Share Capital.
● A Private Limited Company is separate and distinct from its Shareholders and Directors. It can buy and sell property, enter into contracts, sue or be sued upon in its own name. The death, insanity, incapacity or insolvency of its shareholders and/or directors does not affect the existence or business of the Company in any way.
● A Private Limited Company can issue ESOP or Sweat Equity Shares to deserving employees in order to retain and reward them. This is not possible if startup is registered as a Proprietorship, Partnership or LLP to grow startup require talented employees.
● Private limited companies enjoy tax advantages in addition to limited liability. Private Limited companies pay corporation tax and tend to be exempt from higher personal income tax rates.

Conclusion

It is predicted that in the years to come a massive number of entrepreneurs would incorporate their entities to enter a startup friendly Indian market. It would happen because there is now simple taxation due to GST. GST will simplify the process by integrating all taxes, making the process of paying tax simpler and entrepreneur could save a lot of time and energy to manage the various taxes. Any startup would need its very own company and for these Private limited company advantages are a blessing. The government In India is providing more opportunities to the startups to enter in the market by simplifying it’s the rules and regulations and introducing many schemes for its betterment and growth.

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