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  • Writer's pictureJoel Dsouza

Benefits of Limited Company

Updated: Aug 20, 2021

A company is an incorporated business entity registered under the Companies Act, 2013. It is the oldest incorporated business structure in India. Limited company is a type of company which when set-up allows an entrepreneur/owners to keep their own assets and finances separate from the business itself. People who have invested in the business (the shareholders) are only responsible for any company debts up-to the amount that they have invested and no more. It is therefore a good way for a business to get investment without risk to a personal wealth. Essentially a Limited Company is seen as an entity in its own right, which can be subject to legal action. Benefits of a Company Acceptance A limited company is the most accepted business organization in India as its structure is well known to the public Limited Liability Like any other incorporated business, a limited company is a limited liability organization. The owner's liability is limited to the extent of shares held in the company and ends once he pays for the shares. Personal Assets Protection to owners Since the liability of owners is limited, their personal assets are protected against business risk as the company's liability is not the owner's liability. In bankruptcy proceedings, personal assets of shareholders not attachable. Perpetual existence Assets and liabilities of a company belongs to itself and do not belong to the shareholders. Hence, the company will continue to be in existence even if the owner changes. Can sue and be sued A limited company is like 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 a company defaults, others can take legal action against the company and likewise, the company can take legal action against the defaulters. Tax Present corporate tax for small companies is 25 % which is lower compared to other tax rates in India. Funding Since, shareholders liability of a company is limited, angel investors and private equity prefer Company for investment Employment People prefer to get employed in a company compared to other business structure. So, company is the best option for attracting talents

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