Ministry of Corporate Affairs regulates Corporate Registration in India through the Companies Act, 1956, 2013 and other allied Acts, Bills and Rules. MCA also protects investors and offers many important services to stakeholders.
If you have recently started a business or have an unregistered existing business it is important for you to know the necessity of registering your business and what benefits it brings you.
1) Helps establish a business bank account
If you have a registered corporate business it equips you to be able to open a bank account under your business name. A business bank account helps you separate your personal and business transactions from one another and gives a more professional outlook when you approach other people, etc.
2) Reduce personal risk or liability
A registered business helps you limit your liabilities etc. to the number of shares you hold in the company. It separates your personal and business assets, thus keeping your personal assets safe in case of debts. Your registered business is a separate entity.
3) Grant loans
Having a registered business number/account makes it easier for investors and/or banks to believe that your business is not a fraud. It helps you attain loans from banks for your business when and if needed. Even independent lenders and investors would ask for paperwork, registered documents, etc. before lending you any amount of money.
4) Helps build reputation
One major benefit of registering your business is that it stimulates customer-owner trust. When you have a registered business people think of investing in your company’s services, products because they ought to know it is not a fake business. It also enhances the prestige and reputation of your business as your customers; investors will perceive you as a more stable business than an unregistered one.
5) Hiring employees
When you have a registered business it becomes easier to hire employees for your business. You can put up advertisements about openings on various sites and people will consider your business if it is registered because they know it is a legitimate business. It also enables you to pay your employees in accordance with the law and also file for other taxes, etc.
6) Helps with continuity
When a business is registered it is an asset. You can later pass on the name, sell it to investors or assign it to someone under the same name in order to maintain the continuity of your business after years and for years to come. When a business is registered a name is built and so is its goodwill, this makes it easier for others to continue on an already well-established business.
7) Legal protection
Once when your business is registered with the Ministry of Corporate Affairs no one can use the same business name for whatsoever purposes without your knowledge or approval. Thus registering your business protects you and your business and from anyone using it illegally. You can sue them legally in case of false use of your name.
As you can see, there are multiple advantages to business registration and it works in your favour only. It might cost you some money and have you invest your time at the initial stages of your business but it will help you for years to come.