Starting a company in India is a dream for many entrepreneurs, but the decision to register a company often comes with hesitation. While there are numerous benefits which a company registration offers like limited liability, better credibility, and access to funding, it also introduces complexities that might discourage budding business owners. Because of the hectic compliances, the costs associated with regular operation as well as closing down the company, many individuals opt for simpler business structures like Sole Proprietorship or Partnership.
Today, we will explore the 3 key reasons why people avoid registering a company in India besides having numerous benefits being provided by the government.
- Lack of Educational Background:- There are several persons in India who things that running business in the form of a company required an expertise in the filed of finance, taxation, regular compliances, regular filing, regular updates, etc. However, such is not the case in actual scenario. Because of these factors stops an Individual to start his or her business in the form of Company. However, in actual a person should only have knowledge of his business to run company in the most profitable manner.
- Big gap between professionals and themselves:- This is one of the crucial reason that persons generally come across in last few years that they found it difficult to explain their requirement and professionals are also not able to devote sufficient time to these Individual requirement. This gap may arise due to many reasons which may be financials, psychological, technical or emotional. There are numerous Individual who wants to start their business they have the knowledge of the business but once it comes finding out a compatible professional who can resolve all their queries it becomes difficult for them to get it done.
- Compliance cost:- Severe compliance cost both in terms of finance as well as non finance matter. Like decision making is easy in other form of business in comparison to company form of a business. Compliance include numerous aspects like Mandatory company audit, DIR -3 KYC, Income Tax Return filing, AOC 4 filing, MGT 7A filing, holding board meeting, holding annual general meeting, preparing minutes books register etc. It does not only involve cost to run a company but actually it also cost relating to closing down of the company as well. All these factors involve heavy cost in terms of compliances as well as shutting down of a company.
In the end we would again like to clarify that doing a business in the form of company may be beneficial or non beneficial to a person. It completely depends upon the psychology of an Individual. There are numerous article available over the Internet which can further guide you to make a better decision.
