Why is a Pvt Ltd preferred by today’s start-ups?
Any Start-up requires a strong foundation and that comes with solidifying the roots from which you will grow. One, you need likeminded people with you as your core team. Two, you need the right set up in terms of organisational structure to have a clear line of execution. And three, most importantly you need well defined avenues of investments and opportunities to raise funding. Talking about the last root, we now see why a Pvt Ltd business would be better for you in the long run compared to other forms of businesses.
A Private Limited company is an association of 2-50 members acting voluntarily and shares limited liability. Aling with the liability, Pvt Ltd is also one where the transfer of shares is limited to its members, hence not allowing the general public to invest in it.Right off the bat, the definition of it gives us some advantages about why it is a good option for a starting business venture. As young entrepreneurs, one would want to expand quickly, and want the people’s trust by sharing the company with them but that is not always the best choice. Some more benefits are detailed below;
Venture Capitalists here are more attracted to risk free investments where they are assured to at least get their money back and also a Pvt Ltd is one out of the two existing methods via which your company can take money from angels or VCs. It also helps for the VCs to know that the transfer of shares if needed, is a rather simple process in comparison.
Perpetual Succession in a Pvt Ltd Company comes as a safety net for the owners, investors, and customers as it always helps know the continuity would be maintained in the business. The continuity would also help in creating goodwill of the company and build trust overtime, all of which is very important to be thought about at the start of your business venture.
In the context of Liability, let’s say the company is unable to pay a certain amount of loan, you as an owner would be liable to pay proportionate to what you own and not the entirety of the debt hence ensuring the debt risk is minimised and your financial safety increased.
Globalisation has given avenues for any and all types of funding to be received and invited which means your Pvt Ltd would be able to (under Indian law) gain funding from Foreign Investors under the umbrella of FDI. These would be direct investments helping you build capital, brand value, and international recognition.
Lastly, it helps build credibility as the company would be posted on a public database accessible by all, making it transparent and trustworthy.
We at Helpurstartup.in believe, that to start off the entire process two things are crucial. One, a zeal that comes from you to want the best for you and your start-up and two, an expert hand guiding you through the legality of it. You provide the zeal; we match it with our passion and work with you to build your dream. Let’s get Started now!
Any Start-up requires a strong foundation and that comes with solidifying the roots from which you will grow. One, you need likeminded people with you as your core team. Two, you need the right set up in terms of organisational structure to have a clear line of execution. And three, most importantly you need well…