8 Benefits of Pvt Ltd Company in India
The private limited company structure is a key factor in the success of any business.
It ensures that the ownership of the company is limited and that only a few people at the top can make business-related decisions.
Apart from that, here are all the amazing benefits of Pvt Ltd Company Registration Online:
- Separate Legal Entity
- Uninterrupted existence
- Limited Liability
- Free & Easy transferability of shares
- Owning Property
- Capacity to Sue and be Sued
- Dual Relationship
- Borrowing Capacity
Separate Legal Entity
A Private Limited Company (Pvt Ltd) is a separate legal entity from its owner.
The benefit of having a separate legal identity from the shareholders is that the company can have a different name and maintain its own bank account. It allows the business to have an independent identity, which helps in attracting customers and investors.
Uninterrupted Existence
Pvt Ltd companies are popular for their ability to exist without interruption. They do not need to worry about going public but instead focus on running their business smoothly and having a good reputation among their clients and competitors.
The owners of a Private Limited Company have unlimited life tenure and can continue to manage the company until they choose to stop doing so or until they die.
Limited Liability
The liability of a Pvt Ltd company is limited to the amount invested by the owner or partners in the company.
This means that if a Pvt Ltd company goes bankrupt, the owner’s personal assets will not be affected and they will not be liable for any debts incurred by the company.
As a result, these companies can be set up with minimal risk and this has led to an increase in their popularity.
Free & Easy Transferability of Shares
The company’s shareholders are the company’s owners, who have the right to transfer their shares in the company to other people or companies. As a result, they can be transferred without any obligation to sell them back to their original owner.
Owning Property
The benefits of owning property are many as they include tax benefits, savings, and investment.
Other than that, the advantages of owning property are many. For instance, it is an asset that can be used to generate cash flow, which in turn can be used to fund business growth and expansion.
Also, they can use the business-owned property as collateral for loans.
Capacity to Sue and be Sued
It has the capacity to sue and be sued, which means that it can face legal action without having to worry about losing its assets.
This gives the company the power to take any action against any person or entity.
Also, they can sue their employees if they feel that their company’s interests are being threatened or damaged.
Dual Relationship
In a Pvt Ltd Company, a company can make a valid and effective contract with any of its members.
It is also possible for a person to be in control of a company and at the same time be in its employment.
Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.
Borrowing Capacity
Pvt Ltd Company can easily borrow funds and get a loan.
Also, it can issue debentures, secured as well as unsecured and can also accept deposits from the public.
Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Tax Benefits for a Pvt Ltd Company
Directors’ Salaries
The goal of everyone who is the company’s owner or administrator is to make the most money possible.
The founders or directors will receive the profit amount in a predetermined profit-sharing proportion like a dividend.
Directors may take profit as pay rather than dividends to save on taxes.
Thus, a private limited company’s expenses have been the founder’s or directors’ salaries.
Sitting Fees
The corporation may charge the directors’ attendance fees for board meetings. Director sitting costs must not exceed Rs. 1,000,000, and BOD makes such a determination.
When handled by the directors, it is exempt up to the specified maximum and may be recovered as that of an expense.
Initial Costs
These are costs associated with incorporation, incurred during and after the private limited company’s foundation.
They consist of stamp duty, fees payable to a registrar, fees for establishing AOAs and MOAs, and so forth. We can use these costs to reduce our tax burden if we have adequate paperwork.
Rent
Rent for a director’s or even a relative’s home may be appropriately recorded if it is the physical address of a firm.
Therefore, we do not need to report the residence to HM Revenue and Services to deduct rental expenses and claim tax incentives.
Capitalizing Capital Assets and Depreciation
A balance sheet asset that has reached the end of its useful life must be depreciated. It is now displayed as an expense.
The balance sheet must contain it. Doing this can extend tax advantages beyond a few months of a corporation’s fiscal year and subsequent years.
Expenses for Amusement
These are common and fun costs associated with sharing successful business with family or business colleagues.
In other words, you save money on taxes at around the same rates and receive a flat discount of 30% on top of the actual VAT rate.
Cost of the Director’s Vehicle
During business meetings and trips, the automobile has been used. Gasoline costs, as well as vehicle maintenance and repairs, are included in the list of business expenses.
Tax savings of between 22% and 30% are possible with the right preparation and paperwork for tax savings.
So, what are you waiting for?
Apply for Company Registration Online and register your business as a private limited structure to get all these benefits.
