The top 6 Advantage of a company

Today I’m going to share with you the advantages of a company.

Company is the highest form of doing business; other forms of doing the business include sole trader, partnership, and joint venture.

Every form has its own significance and limitations. But why should you choose a company instead of a sole trader or partnership?

Nevertheless having a company is not a must but it is important. Here I will share with you the legal advantages of having a company as a form of doing business over a partnership, joint venture, or sole trader.

advantage of company

Advantage of a Company

The following are the advantage of a company;

Separate Liability

How do you feel when you hear you are not legally responsible for the acts of your company?  I’m sure it feels good! This is unique and it is the best legal advantage of having a company.

Once duly registered a company becomes a person (artificial one). For example, if two individuals joined to open the company, then the company opened becomes the third individual.

A company by being an artificial person draws the capacity to be legally liable separately from the owners. It has its own name and its own seal, its assets and liabilities are separate and distinct from those of its owners.

However, in some instances, the owners of the company may be liable for the acts of the company, for example when they use the company for fraudulent purposes. In other forms of doing business, there is no separate liability.

Separate Property

The company can own properties in its own name. This includes movable properties e.g. Cars, furniture, etc., and immovable properties like lands and buildings.

An owner of the company cannot claim to be the owner of the company’s property during the existence of the company.

The properties of the company are not the property of the owners therefore in case of any quarrel example debt, your personal property cannot be involved to pay off, and also you can not involve the company’s property in your personal matters.

This alone marks your personal property safe from the company’s concerns.

Perpetual Succession

This legal advantage simply entails that, the company does not die or cease to exist even all of the owners die.

Alternatively, you can say that a company can never suffer a natural death.

Assume A & B have a company named X and Y co. Ltd and both passed away in a tragic car accident, what will happen to the company?

The shares of the deceased will be inherited by their respective hires and the company will move on.

Because the company is created by the process of the law (called Incorporation) and can only be put to an end by the process of law (called winding up).
It is very easy to pass (through the transfer of shares) your company to your generations.

Separate Management

This is another super advantage of having your company. The good news is that you can open your company and need not be necessary to manage it.

Generally, a company is administered and managed by the Board of Directors which is termed to be separate from the company.

read also;

How does company law control the power of the company’s directors

Duties of directors of a company

qualifications of directors of a company

Easy to raise Capital

It is simple to raise capital when you have a company. You can do that either by borrowing or selling shares of the company.  Both means are good depending on the objectives of your company and the nature of its business.

Capacity to Sue and Being Sued

A company can sue or be sued in its own name as distinct from its owner. It may also inflict or suffer wrongs. It can in fact do or have done to it most of the things which may be done by or to a human being. By being so may reduce disturbance in terms of your personal issues.

read also: a sample of primary documents for starting your company

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Isack Kimaro
Isack Kimaro

Editor-in-chief and founder of Holder of Bachelor of Laws (LL.B) and Post Graduate Diploma in Legal Practice. Lawyer by profession and blogger by passion