The advantages of company over partnership firm
Compared to partnership form of organization the service and advantages of company over partnership firm can be described as below.
There are some points to be listed in the advantages of company over partnership firm are shown in the lists.
- The provisions relating to clubbing of income under section 64 of the income tax act do not implement even if the business is carried on by family members through a company. This happens which a company conclusively leads to reduction in liability to tax on the part of the individual members with the advantages of company over their liability .
- The certain company under the section 45 of W.T. act 1957 is specified wealth tax that are not liable, though the shareholders will be liable to wealth-tax on the value of their holdings.
- The dividends from any Indian company qualified for deduction under section 80M and 80L of the act to the subject limits specified therein.
- The companies are subject to a flat rate of tax regardless of the quantum of their income. The different tax rates are becoming suitable to a widely held company and a closely held company.
- There are certain special tax concessions, allowances and deductions given under the income tax act only in the company form of business enterprises.
- In a private limited company, the number of members can be up to fifty excluding its present and past employees. In a public limited company registration, there is no restriction on such number of members. In case of a partnership carrying on banking business the maximum numbers of partners can be ten and in case of any other business twenty.
- A company has a different legal entity specific from the members who constitute it. A partnership is called as a firm that has no legal presence apart from its members. This means that partners and firm are one and the same.
- The liability of the partners is unlimited in a company. The liability of shareholders is usually unlimited. However, the law does not prevent a company from rendering the liability of members unlimited of a company.
- The shares of a company are freely interchangeable. But in the type of a private limited company registration of the articles define the rights of members to transfer their shares. In a partnership firm, a partner cannot transfer his share without the approval of his co-partners.
- In a company their restrictions in the articles are effective as there is constructive notice of the directive and articles for every person who deals with the registration company.But in the instance of a partnership their restrictions on a members authority contained in the partnership deed are of no avail against outsiders.
- A company has perceptual series and any shareholders does not change the presence of the company registration. When it is converted according to the deals of the act to come an end. When a partner dies or becomes insolvent to provide a partnership comes to an end.
- The shareholders of a company do not interface in subjects of the registration company directly.It is managed by a board of directors, who are elected by the shareholders. But a partnership is maintained by all partners or each of them acting for all their registration in Chennai. The partners may distribute the work of management themselves in any aspect agreed upon by all partners.
- A company may raise its financial resources by the issue of a large number of shares of small value which is within the ability of an ordinary investor.
There are some points over the advantages of company over partnership firm can be mentioned.