Incorporating a company is always not so easy. There are many factors which one has to take care of while incorporating a company. Firstly it is very necessary that the liability of the company and its shareholders are clearly defined. Otherwise one fine day when the company is at a position of closure then all the shareholders of the company will come to streets. Thus it is very necessary that the liability of the company is different from the liability of the shareholders. A company is generally constituted by various shareholders who have their particular stakes in the company. These shareholders are generally present in the board of directors of the company. These shareholders play a very important role in every decision making for the benefit of the company. However as this is a world of uncertainty one can never give a guarantee that the company will always run in profit. There may be times when the company will have to bear great loss. Thus in that case if the liability is not demarcated properly then everyone will come to streets and will become bankrupt.
Therefore it is very necessary that one incorporates a Limited Company. As the name itself suggests a limited company is a company whose liability is limited to a particular extent. In other words the company's officers and the liability of the shareholders of the company are limited. That is if the company is at loss then will be liable to the agreed extent. They won't have to lose their personal assets too for recovering from the loss or in the event of failure of business. There are many instances wherein the personal assets of the shareholders of the company can be at risk if the company incorporated is not a limited company.
Thus it is necessary that one incorporates a limited company so that one reaps unlimited benefits out of it. Further there are various other reasons because of which a limited company is favorable. First of all a limited company instills a sense of confidence amongst the customers and the suppliers of the business. Further the greatest benefit of a limited company is that there is no set time period for a limited company to commence its business. Therefore incorporating a limited company is very simple and also very cost effective. Last but not the least on the occasion of winding up or receivership the assets of the shareholders are not at risk.
