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The Advantages of Private Limited Company Registration
A company acts as a separate legal entity from its directors and shareholders, with directors running the company and shareholders owning the company. This means that all assets, profits and liabilities belong to the company. The business is financed by its own private assets. Sole traders enjoy minimal protection, as there is little difference between corporate financing and private assets, meaning that personal assets such as real estate are not protected if the company gets into debt. If the company gets into difficulties, the directors or shareholders are responsible for the amount of capital they invest.

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One of the greatest advantages of a joint stock company over sole proprietors is tax efficiency. Limited liability companies pay corporate tax at a flat rate of 19% on their profits while sole traders pay income tax of 20-45% on taxable profits. In general, this gives corporations a better tax rate. This is the main reason why people go through the process of establishing a joint stock company before transforming their structure from sole proprietor into a joint stock company. A public limited company has a wide range of tax-deductible costs and allowances and can claim all profits.

Establishing a joint stock company is one of the quickest and simplest corporate structures to start with. Transparency in the management of your small business by a limited company A limited liability company must be registered with a registered office (the UK Registrar of Companies). This provides potential investors, partners and customers with a certain degree of security. The establishment of a company is associated with an official registered office where a range of company information, including name, address and financial details, is recorded in a public register. If the sole proprietor is not registered with the company, then the company is not transparent to outsiders.

It is common for business owners who do not intend to run a public limited company, such as retailers, to form a dormant non-trading company and stop taking company names. If you register as a sole trader, you do not reserve your company name. No name of a public company is the same. By establishing a limited liability company, however, you can prevent someone else from taking your company name.