8 Essential Benefits of Registering a Business

Before you take the plunge and start your own business, it’s essential to consider all the different factors that go into it. One crucial step in this process is registering your business. While it seems like another obstacle, registering your business actually has numerous benefits that can help your company grow and succeed. This article will cover some of the top advantages of registering your business and why it’s worth the time and effort.

Benefits of registering a business

1. Opening bank account

Obtaining a bank account for a proprietorship or partnership can be challenging because these types of businesses need official legal documentation. Therefore, proprietorships and unregistered partnerships must provide evidence of their business’s existence through various tax registrations to open a bank account. On the other hand, the Ministry of Corporate Affairs confirms the presence of a company or LLP by issuing a certificate of incorporation and memorandum of association. As a result, it is necessary to present these documents to open a bank account for these types of businesses.

2. Getting loan

When applying for a small business loan, it is essential to show the legal existence of the business. Investors and lenders will ask for all the documents before they approve the loan. In short, if you have a company registered, it is easy to get loans approved.

3. Taxes and Liability

Every registered business will have an EIN (Employer Identifying Number) with the state and IRS mentioned. It ensures that the company is a legal entity and also complies with the legal standards of accounting. It also shows that the business pays taxes and that the employees are insured. Having a company registered will have many tax benefits.

4. Reputation with customer

A registered business increases the trust factor in the eyes of the customer. Every customer and client wants a legitimate source to know that your business is legal and safe. If your business is not registered, people suspect your business operations. On the other hand, when a company is legally registered, clients and other people will feel safe investing their money in your business.

5. Supplier arrangements

Registering your business allows you to access supplier discounts that would not be available to unregistered operations. Many suppliers offer wholesale rates to business owners who can provide proof of their official registration with the state. Additionally, business registration is often a necessary first step if you want to secure government contracts for your company.

6. Hiring employees

If you want to hire full-time employees and ensure you comply with state laws regarding paying, registering your business is a must. Once you register your business with the state, you will be assigned a state identification number to handle state taxes for your employees properly. Therefore, it’s a good idea to register your business with the state before you hire employees.

7. Easy transferability

Transferring the business or shares can be daunting if the company is unregistered. In business models like Proprietorship, it is difficult to identify the assets belonging to a business, as it is unregistered. In business models like LLP or company, the business is established as a legal entity, and all the assets and liabilities are registered under the business name. Hence, transferring the shares and ownership is easy in a registered business.

8. Funding for business

Funding is essential for any business to grow and scale its revenues. It is not easy for partnership or proprietorship businesses to get equity funding, as they are unregistered. Most banks and lending partners like to provide funds only for the registered companies, as it gives a sense of security to those institutions. Hence, if you have any plans to take debt or equity funding, it is recommended to register your business.

Conclusion

Now that you know the key benefits of registering a business, we suggest you decide which kind of business model you would like to register to enjoy the maximum benefits.