A common perception among people is that by registering their business as Private Limited company their business is going to progress very rapidly as compare to any other business. The perception in simpler words is completely wrong.
First thing while starting a business is not the company registration, the first thing to focus on is to have a workable business plan and idea that in your perception has enough strength to earn you sufficient income as per your plan.
Once planning and arrangement of capital is finalized next step comes to company registration. Company registration is in simple words is providing your business with legal cover. Private Limited Company registration limits the liability of your business up to the amount of capital with which the company is registered.
Other advantages associated with the company registration is explained as under:
Registering your business as Private Limited Company gives it unlimited life because Private limited Company has unlimited business life as compare to sole proprietor or even partnership firm that dissolves immediately upon the death of any member or sole proprietor.
Once your business is registered as Private Limited Company the liability of the members of the company in case of any business loss or other issue is limited up to the amount of capital with which the company is registered. Whereas in case of Sole Proprietor or Partnership business registration the liability of the members is unlimited that means in case of any loss or related issue members will be personally responsible to make good the loss through their personal property and bank accounts.
In Private Limited company the ownership is transferable from one person to another quiet easily under the guidance provided in companies ordinance, 1984. Whereas Sole proprietorship can not be transferred and partnership business dissolves immediately upon death or any other issue with the partner.
Private Limited companies once registered with a business name has the benefit that no other company can be registered with the similar name or even with the name that has close resemblance with the name of the company already registered.