Benefits of Company Formation
The term company formation is the process by which business owners officially incorporate their operation. It is good to note that a company is considered as a separate entity from its proprietors and those who operate the day to day business operations. The following are the vital documents that a business needs to have when it wants to become a company. Other than the necessary documents that one need to submit to the registrar of companies, one also need to pay for 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.
The law requires those who want to register their companies to have an article of association document which is signed by every partner in the business 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 also lays out the objectives of the company and its relation with other business partners, hence considered the charter of the company. The company registration process can be done virtually on online platforms or by visiting the company registrar offices to submit the documents.
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.
Company formation has numerous benefits, some of which include the following. 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. 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.
In addition, company formation assist a new business in creating credibility with potential customers, employees, vendors and partners. Ownership of a company can be easily transferred from one person or group to another. In addition, companies have easier access to capital thereby making them raise capital pretty fast. 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.
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.