Establishing a business is a special moment in the life of every entrepreneur. A successful startup is a result of a strong vision supported with an adequate amount of funds. However, arranging funds for a startup can sometimes be a tedious task owing to the risk associated with it. Most banks and other financial institutions have stringent eligibility criteria for business loans for startups. However, a good credit score can increase the chances of business loan approval.
Additionally, business registration makes it easier to raise additional funds in terms of business loans. Loan providers in India such as NBFCs, banks, and online lenders are more trustful of legally registered companies and businesses. Hence, they process business loans applications faster. As a result of this, the loan amount is also disbursed faster.
Business registration can be done offline and online through the Ministry of Corporate Affairs (MCA) portal. Business registration also provides numerous other benefits. Some of them are mentioned below:
Through business registration, entrepreneurs can establish a brand image of their business among the audience, customers, and suppliers. Also, since the business contract would be between companies and not owners, it will strengthen their position while dealing with a third party.
Business registration helps define the roles of different founding members and their shares in the business. It can also prove to be helpful in resolving conflicts between top-level management that may arise in the future.
Reduces tax liabilities
The government of India has launched several programs such as skill India and Startup India to promote medium and small scale companies. Since the business becomes a separate entity after its registration, entrepreneurs can avail various subsidies and tax allowances under such governmental programs.
Minimizes personal liabilities
Entrepreneurs are responsible for all the debts and losses that might occur to the company. Such losses due to accidental product defect or service disruption can be financially risky. So, if business owners are in a partnership firm or are a sole trader, registration of the company can make them less liable to the debts and losses. However, in certain metro cities of India, a company becomes a separate legal entity after its registration. This, in turn, protects personal assets from a business loss.
Registering the company gives the business owners an opportunity to sell shares and raise equity capital. Raising fund is an essential factor for the development and expansion of a business. Investors always prefer to invest in a registered company rather than a sole trader or partnership.
Since business registration provides a wide array of professional benefits, entrepreneurs must not overlook its importance. While initiating a business, its registration should always be the first and foremost priority of every entrepreneur. This will not only help the entrepreneurs give a kick start to their startup but also secure the future of their business.
Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!