Why is it necessary to choose the right business structure in India?

In India, choosing the right business structure is a vital part of running a business. Whether you are just commencing your business or your business is growing, it is vital to understand the options. Your legal structure of a business determines your tax rates, management & paperwork requirements, fundraising abilities & more. Partnerships & Sole Proprietorships are comparatively easy to commence, but they lack liability protection.

It is vital to choose your business structure very carefully as your ITR will depend on it. While incorporating your company or entity, remember that each business structure has different levels of compliance that need to be fulfilled. For instance, a sole proprietor has to file only an ITR. However, a Company has to file an income tax return and annual returns with the ROCs.

Books of Accounts of a Company should be mandatorily audited every year. Abiding by this legal compliance requires spending more money on auditors, tax filing experts & accountants. Hence, it is vital to select the correct business structure when thinking of Private Limited Company Registration. An entrepreneur must have a clear understanding of legal compliances he or she is willing to deal with.

Benefits of Private Limited Company Registration in India
The following are the benefits of Private Limited Company Registration in India:

Separate Legal Existence: The Company enjoys a separate legal existence from the owners and it can enter into its assets, and contracts & sue the 3rd parties in its name. As a separate entity, it has a perpetual existence even beyond the members’ lifetime.
Ease in Raising Funds: Being a highly compliant structure, banks prefer to issue loans easily to Companies. Private Limited Company offers key benefits like the ease in limited liability protection for owners & ownership transfer.
Limited Liability: By incorporating as a Private Limited Company in India, owners can limit their liabilities to their capital contribution commitment. Their assets are safeguarded from any big loss or debt in the business, unlike Proprietorship Firms & Partnership.
Easy Transferable: One of the main benefits of Private Limited Company Registration is the share can be easily transferred to the other person without any complications & hassle.
ESOP (Employee Stock Option Plans): A private Company can issue Employee Stock Option Plans to its employees subject to the limitation of the number of shareholders. Section 61 of the Companies Act enables a Private Company to issue Employee Stock Option Plans to its employees.

To know more, visit: https://www.registerkaro.in/private-limited-company-registration