Advantages of Forming a Company
Company formation is the method of incorporating a business. 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. Other than the articles of association documents, the other vital document in the formation of a company is the memorandum of association which contains the names and signatures of those who want 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.
The following are the different types of company, 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. First and foremost companies offer limited liability protection to their owners. The company is treated as a separate entity from the owners; therefore, the owners are not personally responsible for debts and liabilities that the company makes. In this regard creditors cannot sue the proprietors of the company for their failure to pay them; therefore they cannot peruse the personal properties of the owners to use them to pay the business debts.
In addition, company formation assist a new business in creating 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. In addition, companies have easier access to capital thereby making them raise capital pretty fast. Corporations can easily access loans from banks and other financial institutions.
Other have access to various sources of capital, corporations also have unlimited life since their life is independent to its owners. Besides, corporation do enjoy numerous tax benefits including deductible health insurance premiums, savings on self-employment taxes.