Your creative mind has come up with an excellent business idea, you’ve well thought out execution strategy and all you need to do now is, put it to action. But you do not know where to begin. Should I incorporate a company? Should I run my businesses as a partnership?. Questions like this can pop in your mind. This article will help you reach a decision.
What is Incorporation?
Incorporation is nothing but the process of creating a business identity separate from your own in the eyes of the law. This business identity has its own legal personality and for all practical purposes, it becomes a person. But since its primary purpose is to do business it is much better at doing it that you are. It protects you, it gives you flexibility, it can handle more work by hiring more people and so on and the best part is that it can outlive you.
How to Incorporate Your Company?
Incorporating a company is a fairly straightforward process these days. First of all get a unique name registered with the Registrar of Companies. Then draft a document that records the necessary details of a company like its Name, Address etc, this document is called the Memorandum of Association and then draft another document that consists of companies objectives, rules, procedures etc. known as the Articles of Association. File these with the necessary forms of the Company and other details with the Registrar of Companies. This whole process can now be accomplished online.
Are There Any Drawbacks of Incorporating?
Every system has its own drawbacks. In the case of a company incorporation, the main drawback is that you need to fulfill the timely compliances that can cost you money as well as time. You need to keep proper documentation and follow the procedure as prescribed by the government from time to time to conduct the business of the company. It also brings along tax burden.
The Pros Trump the Cons.
The benefit of limited liability alone can trump a lot of drawbacks of a company. The separate identity of a company keeps you protected from personal liability keeping you cushioned if in case things go south. Along with it a company also provides more professionalism in conducting businesses such as raising funds and investments, attracting talent etc.
Life: A company can outlive you but you can also dissolve it if things are not working out for you can get back most of your money from the assets the company has. You can also sell it if it has reached some traction.
Keeping all the above in mind, you can now make an informed decision about your beautiful idea and proceed in the direction that benefits you the most.