Advantages of Forming a Company
The term company formation is the process by which business owners officially incorporate their operation. Company formation process makes the business to be a company, and also the company is treated as an entity that is separate from those who operate it. When a business owner want to convert the business into a company, there are essential documents that are required by the board that regulates company operation. When one wants to form a company, the following are the essential documents that they need to submit to the registrar of companies and also pay the registration fee. First and foremost, those who need to have companies need to have an article of association which is a document that clearly outlines the rules of running the company’s internal affairs.
Moreover, the document needs to be signed by every owner of the company in the presence of a witness. The other essential document that a company need to have is the memorandum of association which contain the names and signatures of the subscribers who wish to form the company. The document is essential since it clearly outlines the objectives of the company and its relation with other investors. The choice of registration process depends on the preference of the proprietors, for instance, there are those that will prefer visiting the registrar of companies offices to submit the documents, on the other hand, others will be comfortable going through the registration process at the comfort of their offices by submitting the documents on online platforms using the registrar of companies website.
Depending on your choice, you decide to form any of the following companies, including public limited companies, unlimited companies, private limited company, limited liability partnership, limited partnership, community interest company, among others.
The following are the benefits that the company owners are bound to enjoy from registering the company. One of the essential advantages of company formations that the owners tend to benefit from limited liability protection. In addition, since the company is taken as a separate entity from its owners, any debts and liabilities of the company are treated separate hence are not the responsibility of the owners. Creditors cannot use the company owners” personal property in paying for the debts since the proprietor’s properties legally considered to be different from the business assets.
The other advantage of forming a company is that a company will be in a better position to create credibility with potential customers, employees, vendors and partners. Other than creating credibility with the customers and employees, ownership of a company can be transferred easily. Besides, it is easier for a corporation to raise capital since they have easier access to capital sources. Corporations have more sources of capital which can finance their debts, for this reason, banks and other financial institutions are more than willing to provide them with loans.
When you have a company, it is good to note that its life if not dependent to your life, therefore, the company has unlimited life, it can still exist after you left it. The other advantage of company formation is that the companies do enjoy tax advantages such as deductible health insurance premiums, savings on self-employment taxes.