Why You Need to Form a Company
Company formation is the situation in which a business becomes a company. 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. One of the vital documents that accompany needs to have is the article of association which outlines the rules that governs the company’s operations.
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. Other than the articles of association documents, the other vital document in the formation of a company is the memorandum of association which contains the names and signatures of those who want 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.
The following are the different types of company, including public limited companies, unlimited companies, private limited company, limited liability partnership, limited partnership, community interest company, among others.
This article tries to explain the benefits of company formation. One of the essential advantages of company formations that the owners tend to benefit from limited liability protection. The great thing about limited liability protection is that the owners are not responsible for any liabilities and debts of the company. In this regard creditors cannot sue the proprietors of the company for their failure to pay them; therefore they cannot peruse the personal properties of the owners to use them to pay the business debts.
The other advantage of forming a company is that a company will be in a better position to create credibility with potential customers, employees, vendors and partners. Other than creating credibility with the customers and employees, ownership of a company can be transferred easily. Besides, it is easier for a corporation to raise capital since they have easier access to capital sources. Banks and other financial institutions are willing to issue financial assistance to corporations than to individuals.
When you have a company, it is good to note that its life if not dependent to your life, therefore, the company has unlimited life, it can still exist after you left it. On the other hand, corporation do gain tax advantages including deductible health insurance premiums, savings on self-employment taxes.