An incorporated company is nothing but a commercial entity which has been created for the sole purpose of carrying a commercial trade which will reap benefits to its owners through the way of revenue. A company comes into existence when a trade, service or commerce related business idea is materialized through the way of venture financing. Throughout the term of the business, capital remains its lifeblood. Compensations are made to the financers in terms of dividends every now and then. Company incorporations are usually larger organizations and more systematic with procedures and processes owing to the several entities that they are obligated by.
Following are a few benefits of a company incorporation which small firms do not enjoy:
- An independent Entity
An incorporated company enjoys the status of being an independent company which is operated by the people mentioned as its board of directors. They decide the direction in which the company grows and also who gets associated with it and how. Although they steer the company, it has an existence of its own which is not affected by the life of the directors or if they want to move on from a particular organization. This gives a company a great advantage of a life which is indefinite and will not end at the death of the owner of the company, which is the case of an individually owned business.
- Limited liability
This is perhaps the best part of a company incorporation. Its liability is only limited to the capital that has been invested in it and the assets that have been purchased in its name. This means that incase of the liquidation of a company incorporation, for any reasons, the personal property of the owner will not be at stake.
- Share transfers
A company incorporation which is publically listed can have its shares sold and re-sold in the secondary financial market. This means that the ownership of the company is not within a few hands and it has a wide scope for development. The fact that new shares can be floated in the market gives an incorporated company the advantage of being able to raise capital for itself when it is required.
A company incorporation does not rely on the lives of the directors or its shareholders. Since it has its own existence which is legal, its succession is based on the transfer of shares. It can enjoy perpetual succession.