There are several good reasons why it makes a lot of sense to register your company. The first basic reason is to protect one’s own interests and not risk personal assets to the point of bankruptcy should their business face a crisis and also be forced to close. Second, it is easier to attract venture capital funds, as venture capitals are assured of protection if the company is registered. Provides tax benefits to the entrepreneur, usually in a partnership, LLP, or limited partnership. (These are terms that have been described later.) Another valid reason is that in the case of a limited company, if one wishes to transfer their shares to another, it is easier when the company is registered.

Very often there is a dilemma as to when the company should be registered. The answer is mainly whether your business idea is good enough to become a profitable business or not. And if the answer to that is a confident and resounding yes, then it’s time for one to go ahead and register the startup. And as mentioned above, it’s always beneficial to do this as a preventative measure, before you can shoulder any responsibilities.

Depending on the type and size of business and how you want to expand it, your startup may be registered as one of the many legal forms of business structure available to you.

So let me first fill you in with the required information. The different company structures available are:

a) Sole proprietorship. That is a company owned and operated or run by one person. No registration required. This is the method to adopt if you want to do everything yourself and the purpose of setting up the business is to achieve a short-term goal. But this puts you at risk of losing all of your personal assets in the event of a misfortune.

b) Company of companies. It is owned and operated or directed by at least two or more than two people. In the case of a partnership company, since the laws are not as strict as those involving Ltd. Partnership, (limited partnership) it requires a lot of trust between the partners. But similar to property, there is a risk of losing personal property in any eventuality.

c) OPC is a one-person company where the company is a separate legal entity which, in effect, protects the owner from being personally liable for any loss.

d) Limited Liability Partnership (LLP), where the general partners have limited liability. LLP combines the best of a partnership firm and a company and the partners are not personally liable for losing their personal wealth.

e) Limited Company that is of 2 types,

i) Limited Company where the minimum number of partners required is 7 and there is no upper limit; the number of directors must be at least 3 and
ii) Private Stock Company where the minimum number of people required is 7 with a maximum upper limit of 50. The number of directors must be 2.