Have you ever wondered what made India rank as the second-highest country with most unregistered companies in the world? After detailed analysis, the tedious and cumbersome process of registering a business and the heavy cost that entrepreneurs needed to pay was discovered as the main reasons behind the situation and hence, the ranking. These reasons made most entrepreneurs choose unregistered partnership firms or proprietorship firms as the form of their business.
However, Setindiabiz with its affordable prices and ease of business registration process came as a relief especially for small businesses in India. Hence, with the intention to make our readers aware of the benefits of registering a business in India, we have enlisted some of the key benefits below: Key Benefits of Registering a Business
Limited Liability Protection
One of the major advantages of registering a business (Private Limited Company or limited liability Partnership (LLP) or (One Person Company) is that its members can enjoy the protection of limited liability i.e. the members of the business will not be personally liable for the business liabilities. In order to cover the risks of running into losses that are always there while running a business, the protection of limited liability encourages and assures the entrepreneur to take risks and move ahead in his entrepreneurial journey without the fear of uncertainty of losing everything.
Opening Bank Account
Since a proprietorship formation of a partnership firm cannot legally prove its existence, the process of opening a bank account for a partnership firm or proprietorship is a difficult and tedious process. In order to open a bank account for a proprietorship or partnership firm, various tax registrations in the name of the firm are required to be produced to prove its existence. However, in the case of a company or LLP the governing body MCA (Ministry of Corporate Affairs) rules and regulates the existence and operations through a memorandum of association (MOA) and certificate of incorporation. This makes it easy for banks to open an account for a company or LLP or OPC etc. after furnishing the copy of MOA and certificate of incorporation to the bank.
Funding for the Business
A business always requires funds to carry out its operations as well as to investors for any reason that serves the purpose of running a business smoothly and efficiently. This can come in the form of equity or debt. As the proprietorship or partnership firm is unregistered it is difficult to obtain equity funds for such businesses for the sole reason that most of the financial institutions and banks do not prefer to lend money to unregistered business entities. Hence, we highly recommend you to register your business in order to raise funds in your business name.
An unregistered business entity is incapable of handling matters related to the sharing of ownership or transferability. Proprietorships being the extension of the proprietor and partnership firm with undefined possession of assets are difficult to transfer. Whereas registered businesses like LLP or a company is a separate legal entity having defined assets and liabilities distinct from its members. This makes the process of sharing the ownership or transferability of a registered business a lot easy.
Fulfilling Buyer Criteria
Each small business wants to do business with large enterprises for their growth and expansion. However, it is imperative to note that most of the large enterprises prefer to do business with business entities that are registered. This also enables the registered business to participate in tenders and fulfill various requirements of buyers as well as customers.