Alok Patnia founded Taxmantra.com, an expert in tax advisory & compliance. He is a Chartered Accountant having prior exposure with Ernst & Young & KPMG.
Doing business as a sole proprietor or as partnership firm why? Don’t you want your business to have a legal existence, enter the professional world? Registering your company would give a legal existence to your business a life of it’s own and once it is done it can only be closed down by legal intervention. People have a misconception, that incorporating a company is a cumbersome and tedious process, actually it is not so. Taking the right steps and following the correct path can get your company incorporated within 15 days.
Why should you register your startup?
If you were to list one or two of the chief benefits of incorporating your business, one of the top reasons would be the instant credibility for your businesses following incorporation. Adding “Pvt Ltd” after your business name can add instant authority. Consumers, vendors, and partners may prefer to do business with an incorporated company.
Tax flexibility and incorporation tax benefits
There are several tax advantages and benefits of incorporating a small business. Though profit and loss typically pass through the the taxation slabs defined by the government and get reported on the personal income tax returns of owners, can also elect to be taxed as a corporation. Likewise, the owner can avoid double taxation of corporate profits by incorporating their business.
Personal asset protection
Allow owners to separate and protect their personal assets in the event of a lawsuit or claims leveled against a business entity. In a properly structured and managed company, owners should have limited liability for business debts and obligations. This remains one of the biggest benefits to incorporating.
Protocol for Growth
If you look above friends and family, for funds you will need to equity or loans for funding your business. Outsiders will make sure they invest there money in registered forms of business and not in any primitive form of entity. Hence, registering your business becomes a protocol for growth.
Which Business structure is right for you?
We encourage the start-up industry to choose from 2 major forms of entities –
1) Limited Liability Partnership
2) Private Limited Company
Related: LLP Vs Private Limited?
Apart from this and entrepreneur can conduct their business as a sole proprietor and partnership firm too, however we do not encourage such primitive forms of entities.