5 Main Reasons to Register a Private Limited Company in India

Author : Govind J | Published On : 15 Apr 2024

Limited Liability:

Registering Private Limited Company in India offers a key advantage in the form of limited liability. This means that the shareholders‘ particular capital is defended, and their liability is confined to the amount they have invested in the company. In the case of legal or financial challenges, creditors can’t pursue the particular capital of the shareholders. This point significantly bolsters the appeal of PLCs, particularly for startups and small businesses, as it shields individual shareholders from inordinate fiscal threat and implicit particular loss. The assurance of limited liability fosters a conducive atmosphere for entrepreneurship, encouraging investment and promoting business growth. It provides a sense of security and stability, attracting both investors and entrepreneurs seeking to establish or expand their business enterprises.

Tax Savings:

Registering a Private Limited Company( PLC) in India can result in substantial tax savings for both the company and its shareholders. PLCs are entitled to many tax deductions and exemptions, which can effectively lower the overall tax obligation. Also, PLCs benefit from a reduced commercial tax rate when compared to other business realities, thereby presenting a charming opportunity for businesses seeking to alleviate their tax obligation. This favorable income tax treatment not only assists in conserving a larger portion of the company’s profits but also provides a fresh incitement for entrepreneurs considering the PLC structure for their enterprises.

Attractive to Investors:

Private Limited Companies( PLCs) hold a strong attractiveness for investors, primarily due to their limited liability structure and essential translucency. This model instills an advanced position of confidence and security among implicit investors, as their particular assets are defended from any implicit liabilities faced by the company. Likewise, PLCs are permitted to issue shares, thereby enabling them to raise capital from the public. This capability to leverage public capital markets makes PLCs an enticing prospect for businesses seeking expansion and growth opportunities. In substance, the PLC model not only offers investors a level of security but also presents an avenue for businesses to access fresh funding for their strategic enterprise.

Perpetual Existence:

The perpetual existence of a Private Limited Company( PLC) is a key advantage that sets it apart from other business structures. This feature ensures that the company remains functional and legally honored regardless of changes in ownership, directors, or shareholders. Unlike sole ownerships or partnerships, where the business ceases to exist upon the death or withdrawal of an proprietor, a PLC can continue to operate indefinitely. This stability and durability provide a sense of assurance to investors and customers, demonstrating that the company has a long- term vision and commitment. Likewise, the ability to transfer ownership and control fluently allows for lesser inflexibility in strategic opinions and expansion plans Overall, the perpetual existence of a PLC is a valuable asset that enhances its appeal as a business entity.

No mandatory requirement to appoint an audit committee:

One notable advantage of registering a Private Limited Company( PLC) in India is the absence of a mandatory requirement to appoint an audit committee, setting it apart from other business structures. This exemption translates into palpable benefits for PLCs, as it allows them to simplify operations and minimize charges associated with conducting audits. By bypassing the necessity for an audit committee, PLCs can save significantly on costs while also reducing administrative burdens. Moreover, PLCs retain the flexibility to appoint an internal auditor, a strategic option that enables them to maintain regulatory compliance and enhance transparency within the organization. This freedom to choose the most suitable auditing approach aligns with the ethos of adaptability and efficiency that characterizes PLCs, empowering them to navigate the regulatory landscape effectively while optimizing resources for sustainable growth.

Registering a Private Limited Company India has numerous benefits including limited liability, tax savings, attractive to investors, perpetual existence, and no mandatory audit committee requirement, making it an appealing choice for entrepreneurs and investors looking to grow their businesses in India.

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