Why You Should Register Your Company
Companies / SME Jan 06, 2022 - 12:02 PM GMTBy: Submissions
There are many business owners out there who want to register their businesses, but they avoid some money required to register their businesses. Others don’t want to register their businesses just to avoid paying taxes.
Remember that any person can launch a business. You just need to have a business idea, a product, or a service to sell to your target market. However, to sell a service or product, you may need to legally register your business. There are many good reasons why it makes sense to register your business. This page discusses why you should register your company.
Raise capital
Today, many business owners find it hard to raise capital for their businesses. Several studies suggest that funding is the biggest problem for most entrepreneurs. With adequate finances, there are good chances that your business can thrive. After all, people tend to invest in businesses that exist and have growth potential. Remember that few businesses are not registered.
The good news is that a registered business can easily raise funds and even attract investors, especially if it’s a limited liability company. Most investors are not interested in investing in a sole proprietorship regardless of whether or not it’s licensed. This is because this type of business can stop operating once the owner dies. Many investors already know that a good business to invest in is one with a formal structure rather than a sole proprietorship or sole trader.
Also, investors want to purchase shares in your company instead of offering you cash. In this case, if you run a business that is not registered, it can be hard to attract them. Some investors may even not take you seriously because a limited liability company is the best way you can show professionalism.
Also, most financial institutions like to offer loans to registered companies and not individuals. They usually give personal and business loans, but they may not be ready to offer you a personal loan to fund your business. The best way you can get a business loan is to make sure that you register a limited company.
Improves your reputation
Many business owners believe that it’s not necessary to register their businesses. Whether you have a physical store or work online, it’s a good idea to register your business. Keep in mind that most online businesses, such as Facebook and Google are registered companies.
When you register your company, the way people look at your company and reputation can improve. Many corporate clients usually like to work with registered companies. For regulation and tax reasons, it can sometimes be wrong to do a transaction with unregistered companies.
No wonder, some corporate customers can sometimes ask for your business license or taxpayer’s card. When it comes to the other customers, they usually trust a business that is registered and provides receipts with your company’s name on them.
Protection from personal liabilities
If you want to register your business as a private limited company, then it’s considered to be a legal entity. This means you can be protected from legal liability. Therefore, as a business owner or shareholder in the company, you cannot be personally liable for an accident, debts, or any other liabilities of the company.
For example, if you decide to access a loan and fail to repay it, then the financial institution can have the legal right to get only your company’s assets. Your personal property or assets are protected from this seizure.
However, if you are operating an unregistered company, you cannot be protected from such seizures. Your bank where you took a loan can get your personal assets to settle your liabilities and debts. In such cases, your company’s assets and that of yours can be sold to settle the damages that arise due to an accident.
It’s worth noting that this legal protection only applies to limited liability companies. Therefore, sole traders and partnerships except for limited partnerships cannot have legal protection.
There is continuity
When you are setting up a business, you want to make sure that your goals are achieved. There are some types of businesses that can fail when their business owners are not there while others can still run quite well even if you are not there. Hence, if you want to have a business that can sustain itself after you die, then it’s a good idea to have a limited liability company.
If you choose to register your business as a limited liability company, it can be passed on to your heirs or even the owners can decide to sell it so that it can continue doing its activities. For example, some businesses that have managed to achieve this include Toyota, Mercedes Benz, and Nestle.
You can have a protected unique identity
One of the major benefits of registering your business is that you can rest assured that someone else cannot use your company name. When you choose the name of your company and register it, the business registration office can verify it to make sure that another business is not using it.
Two different businesses cannot use the same name because the law doesn’t allow it. That said, you should note that incorporated businesses are regarded to be legal entities. Therefore, when you register your company’s name, no other business cannot have the right to register the same name until your company is formally dissolved or goes bankrupt.
Once you register your business, you can now brand it by designing your business card, logo, and letterhead. This allows you to have a unique identity that can easily be identified by your customers.
Above all, it can be hard to register your limited liability company considering that there are many documents you need to complete. This is the reason why it’s a good idea to use a company formation agent to work on your behalf. A good company formation agent can help you complete the documents, choose a company name, and many more. Even better, some company formation agents can assist you to register a company quickly and at affordable fees.
BySarah Jane Mejia
© 2021 Copyright Sarah Jane Mejia - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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