6 reasons for choosing Private Limited Company Registration over other forms of entities

 Private Limited Company Registration

Company Registration

There are many options of doing business in India like Private limited company registration, Public limited Company Registration, Limited Liability Partnerships, One Person Company, Proprietorship, traditional partnership.

Each entity has its own pros and cons and type of entities depend upon the nature of business as well as long term vision of the entrepreneurs.

Private limited company registration is very popular form of company registration in India especially among the new generation of startups and youth in India.

Private limited companies are required to do lot of regulatory compliance post registration as compared to other form of entities and therefore, sometimes a question comes in the mind of an entrepreneur as to whether it is worth going for private limited company registration as compared to other forms of entity registration keeping in view the increased compliance cost and other hassles.

In this write up, we have provided you 5 reasons as to why Private limited company registration is better option in spite of the fact that it involves lot of compliances and is quite expensive proposition as compared to other form of entities.

6 reasons why you should chose Private Limited company registration as compare to other forms of entities

 

1)      Favourites of Investors

Private limited companies are favourites of investors who want to invest in the company whether in the form of seed funding, angel funding, venture capital or private equity. On the basis of the valuation of the company whether it is start-ups or existing companies, the investors take a portion of the equity shares in the private limited company and invest their money. Later on they can also sell their shares in the company to bigger investors and make an exit. This makes private limited company a very popular form of entity registration as compared to other entities.

2)      Suitable for start-up India Scheme

Private limited companies are one of the recognised forms of entities to be registered under Start-up India Scheme of the Indian government. The scheme allows such companies lot of benefits and exemptions from various regulatory compliance as well as Income tax benefits.

3)      Taxed at Lower Rate

These companies have an advantage of getting taxed at concessional rates of 25%, 22.5% and even 15% which is quite low as compared to LLPs and partnerships which are taxed at 30%. Even sole proprietorship have maximum tax rate of 30%. Thus, Private limited companies offer lower tax rates as compared to other entities.

4)      Easy to make amendments and changes

Another advantage is that any changes to be made in Directors or registered address of the company or objects of the company or any other amendments, same can be done online without making a physical visit to any authorities.

5)      Preferable for foreign Companies

Foreign companies desirous of setting up business in India prefer wholly owned subsidiary company where the parent company can hold majority of shares in Indian company.

 Accordingly, subsidiary company registration in India is preferred by foreign entities owing to the fact that it allows retaining the brand name of parent company and is also tax efficient.

6)      Brand value and Reputation

Another reason is that private limited company’s enjoys brand value and reputation as compared to other form of entities. It is quite similar to an entrepreneur stepping out of a luxurious car will have more eyeballs as compared to another entrepreneur stepping out of a normal ordinary car although the purpose is fulfilled by both the vehicles.

From the foregoing, it may be concluded that there are sufficient reasons for an entrepreneur to choose private limited company registration over other form of registrations even though the compliance cost of private limited companies are higher as compared to the other forms of entity registration.