Advantages of opening a Private Limited Company in India
Private Limited Company Registration is the most preferred business structure in India. Manufacturing companies, Product and Service based businesses, Start-ups and even Non-profit Organisations register their business as a Private Limited Company. A Private Limited Company is the preferred choice for Angel Investors, Venture Capital Investors and other Fund Managers as it provides them all the benefits and comfort that other business structures do not provide.
In India, a company in which the shares are held privately by one person or a group of people who have limited liability is commonly known as a private limited company. When the shares are held by only one person it is known as One Person Company (OPC), when the general public can hold the shares of a company then it is called a Public Limited Company and finally when the shares are held by a few people privately then it is called a Private Limited Company.
There are multiple benefits of registering your business or startup as a Private Limited Company in India. We have listed below a few prominent benefits.
What’s good about registering your business as a Private Limited Company
- Favourite Business structure for Investors: Investors find Private Limited companies appealing due to their well-structured nature and fewer complications. Importantly, the ease of exiting from a private limited company adds to its attractiveness for potential investors.
- Limited Liability Protection: Shareholders of a private limited company benefit from a key advantage that their responsibility is limited to the extent of their capital contribution.A private limited company provides a crucial layer of protection.This advantage significantly reduces the risk of personal assets being seized to settle business debts in the unfortunate event of business failure.
- Better Business Profile: A private limited company is perceived as more substantial than businesses run by a sole trader. When customers place orders or award contracts, they want to be confident that the supplier has the resources to provide a reliable service.
- Ease of Funds: Private limited companies enjoy broader access to funds for expansion. This includes bank loans, venture capital, and crowdfunding, as investors perceive these companies as having lower risks. Another avenue for capital infusion is through the sale of shares in your business, even though public sales of shares are not permitted.
- Trust and Credibility: Private limited company is a widely recognized and preferred business structure. Corporate customers, vendors, and government agencies show a preference for engaging with a Private Limited Company over proprietorships or regular partnerships. Including “Pvt. Ltd.” in the company name frequently inspires greater confidence and trust among customers, suppliers, and partners.
- Business Name Protection: When you register your private limited company with MCA, your business name is protected and cannot be used by any other business. This level of protection makes each company’s name unique and protected. It also prevents other businesses from copying or imitating your business name.
