Why to Incorporate a Company?
There can be many advantages for incorporating a company of which some of them are elaborated here.
The liability of the company is limited in comparison to sole proprietorship concern as in sole proprietor, the owner is personally liable for all the liabilities and if not fulfilled than it would he would have to give it up there assets so that to make all the liabilities fulfilled. Rather in case of corporate sector, you are only liable for a particular amount. In case of bankruptcy, the director or the founder of the company is not liable for the personal liability also.The most important and the best benefit of incorporating a company is that it is the easiest form where one can raise funds easily from the markets or in any form as loans from the banks. It may sell shares and securities or debentures and raise the money. In case of sole proprietor, the investor investing in the business will see the creditability of the owner because if there is default than it would be the responsibility of the owner to make such default clear.The another advantage of the company is that it would have more credit in comparison other forms as in the society the company is considered to be having higher position than the other forms. The word “Private Ltd” is considered to be most creditable.The accountability would be maintained very much nicely as the separate records for the same is available. In case of sole proprietorship business, it would be very much difficult to bifurcate the personal expenses and the business expenses run in the name of owner.The liquidation or paying off the liabilities would be easier in case of the company there would be many people liable to pay off, rather in case of sole proprietorship concern the owner would be personally liable and no other person would make him pay the liabilities.The concept of perpetual existence will come into picture as the company and the owner is completely different and there would be no change from the change in status of the person. For example, if the person dies than also the company would be in existence and the operations of the company would be carried out by some other person.The expenses which are done for the business purpose would be easily deductible as it would be clearly identified which expense is made for the business purpose and which expense is made otherwise.The tax benefits the individual business person would be getting and as a whole would be getting would be extra. As the company would the tax benefits such as Medical benefits of the whole family, Losses of the previous year would be easily allowable and can set off, Profits from the business would be left for the investment purpose and can save the tax.
