5 Benefits of Incorporated Business
Updated: Aug 20, 2021
An incorporated business means a business entity registered and incorporated under any Law. In India, Limited Company and Limited Liability Partnership are the incorporated business forms. Limited Companies are classified as One Person Company (OPC), Private Limited Company and Public Limited Company.
Limited Company is registered and administered under the provision of Companies Act, 2013, and Limited Liability Partnership is registered and administered under the provision of Limited Liability Partnership Act 2008. An incorporated business (Limited Company and Limited Liability Partnership) has the following advantages:
Acceptance An incorporated business is the most accepted business organization the structure and is well known to the public.
Limited Liability The owners liability is limited to the extent of agreed capital contribution to the business and ends once he pays agreed capital.
Protection of Personal Assets of owners As the liability of owners is limited, their personal assets are protected against the business risk as the companys liability is not the liability of its owners.
Perpetual existence The assets and liabilities of an incorporated business belong to itself and do not belong to the shareowners. Hence, an incorporated business will continue to be in existence even if the owner changes.
Can sue and be sued An incorporated business is an artificial person created by law. Like any other person, it can sue and be sued before the court of law. This means that if an incorporated entity defaults, others can take legal action against the entity, and likewise the business can take legal action against defaulters.