company form of business

company form of business

7 Reasons Why Company Form of Business is the Best Choice

Are you thinking of starting a new business? If so, you might be wondering what type of business structure to choose. There are many options available, such as sole proprietorship, partnership, corporation, limited liability company, and more. But which one is the best for your needs?

In this article, we will explain why company form of business is the best choice for most entrepreneurs. We will also provide some tips on how to set up and run a successful company. By the end of this article, you will have a clear idea of why company form of business is the best option for you.

What is Company Form of Business?

A company form of business is a legal entity that is separate from its owners. The owners of a company are called shareholders, and they have limited liability for the debts and obligations of the company. A company can have one or more shareholders, and they can be individuals or other entities.

A company has its own name, identity, and assets. It can enter into contracts, sue and be sued, own property, and pay taxes. A company is governed by a set of rules called the articles of association, which define the rights and responsibilities of the shareholders and directors. A company also has a board of directors, which is elected by the shareholders and oversees the management of the company.

A company can be either public or private. A public company is one that sells its shares to the general public through a stock exchange. A private company is one that does not sell its shares to the public, and its shares are usually held by a small group of shareholders.

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Why Company Form of Business is the Best Choice?

There are many benefits of choosing company form of business over other types of business structures. Here are some of the main reasons why company form of business is the best choice for most entrepreneurs:

1. Limited Liability: One of the biggest advantages of company form of business is that it provides limited liability to its shareholders. This means that if the company goes bankrupt or faces legal issues, the shareholders are only liable for the amount they invested in the company. They do not have to risk their personal assets or income to pay off the debts or obligations of the company. This reduces the financial risk and stress for the shareholders and encourages them to invest more in the company.

2. Perpetual Existence: Another benefit of company form of business is that it has perpetual existence. This means that the company does not cease to exist when one or more shareholders die or leave the company. The company can continue to operate as long as it complies with the legal requirements and regulations. This ensures continuity and stability for the business and its stakeholders.

3. Transferability of Shares: A third advantage of company form of business is that it allows easy transferability of shares. This means that the shareholders can sell or buy shares from other shareholders or third parties without affecting the operations or management of the company. This gives flexibility and liquidity to the shareholders and enables them to exit or enter the business as they wish.

4. Access to Capital: A fourth benefit of company form of business is that it provides access to capital. This means that the company can raise funds from various sources, such as issuing shares, bonds, debentures, loans, grants, etc. This gives more financial resources and opportunities for the company to grow and expand its business.

5. Professional Management: A fifth advantage of company form of business is that it offers professional management. This means that the company can hire qualified and experienced managers and employees to run its operations and activities. The board of directors can also appoint experts and advisors to guide and supervise the management team. This ensures efficiency and effectiveness in the performance and decision-making process of the company.

6. Tax Benefits: A sixth benefit of company form of business is that it enjoys tax benefits. This means that the company can avail various tax deductions, exemptions, credits, rebates, etc., depending on its nature and size. For example, some companies can deduct expenses related to research and development, depreciation, interest payments, etc., from their taxable income. Some companies can also claim tax credits for investing in certain sectors or regions, creating employment opportunities, etc.

7. Reputation and Credibility: A seventh advantage of company form of business is that it enhances reputation and credibility. This means that the company can build a positive image and goodwill among its customers, suppliers, investors, regulators, competitors, etc., by following ethical and legal standards and practices. A company can also gain recognition and trust by obtaining certifications, awards, accreditations, etc., from various authorities and organizations. offers wholesale distributors and manufacturers a simple and economical way to grow their business online
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How to Set Up and Run a Successful Company?

Setting up and running a successful company requires careful planning and execution. Here are some steps you need to follow to set up and run a successful company:

1. Choose a Suitable Name: The first step is to choose a suitable name for your company. The name should be unique, catchy, and relevant to your business. You should also check the availability and legality of the name before registering it.

2. Register Your Company: The second step is to register your company with the relevant authorities and agencies. You will need to fill out the necessary forms and documents, pay the required fees, and obtain the certificate of incorporation and other licenses and permits.

3. Open a Bank Account: The third step is to open a bank account for your company. You will need to provide the bank with your company details, such as name, address, registration number, etc., and deposit some initial capital.

4. Appoint Directors and Shareholders: The fourth step is to appoint directors and shareholders for your company. You will need to decide the number and type of directors and shareholders, their roles and responsibilities, their remuneration and benefits, etc. You will also need to hold regular meetings and maintain proper records and minutes.

5. Hire Employees: The fifth step is to hire employees for your company. You will need to recruit, train, motivate, and retain qualified and skilled employees who can perform the tasks and functions of your company. You will also need to comply with the labor laws and regulations, such as minimum wage, working hours, health and safety, etc.

6. Develop a Business Plan: The sixth step is to develop a business plan for your company. A business plan is a document that outlines the goals, strategies, actions, resources, budget, etc., of your company. It helps you to plan, organize, monitor, and evaluate your business activities and performance.

7. Market Your Company: The seventh step is to market your company to your target audience. You will need to identify your potential customers, competitors, suppliers, etc., and design and implement effective marketing strategies and campaigns. You will also need to create and maintain a strong online presence and reputation for your company.

8. Manage Your Finances: The eighth step is to manage your finances for your company. You will need to keep track of your income and expenses, prepare financial statements and reports, pay taxes and bills, etc. You will also need to seek external funding sources if needed.

9. Evaluate Your Performance: The ninth step is to evaluate your performance for your company. You will need to measure and analyze your results and outcomes, identify your strengths and weaknesses, opportunities and threats, etc. You will also need to make adjustments and improvements based on feedback and data.

10. Grow Your Company: The tenth step is to grow your company by expanding your market share, product range, customer base, etc. You will need to innovate and diversify your business offerings, explore new markets and segments, form partnerships and alliances, etc.

The Global Demand for Corporations

One of the most popular forms of business organization is the corporation, which is a legal entity that acts separately from its owners or shareholders. According to the World Bank, there were more than 115 million registered corporations in the world in 2018, with China, the United States, and India having the largest numbers. The global demand for corporations is driven by several factors, such as:

– Limited liability: Shareholders are not personally responsible for the debts or liabilities of the corporation, which reduces their financial risk.
– Access to capital: Corporations can raise funds by issuing stocks or bonds, which can attract more investors and lenders.
– Perpetual existence: Corporations can continue to operate even if the owners die or sell their shares, which ensures business continuity.
– Tax benefits: Corporations may enjoy lower tax rates or deductions depending on their structure and location.

The Global Demand for Sole Proprietorships

Another common form of business organization is the sole proprietorship, which is a business owned and operated by one person. According to the U.S. Small Business Administration, there were more than 25 million sole proprietorships in the United States in 2019, accounting for about 73% of all businesses. The global demand for sole proprietorships is influenced by several factors, such as:

– Ease of formation: Sole proprietorships are the simplest and cheapest form of business to start, as they do not require any legal documents or registration fees.
– Full control: Sole proprietors have complete authority over their business decisions and operations, which gives them more flexibility and autonomy.
– Personal income: Sole proprietors receive all the profits from their business as personal income, which can be beneficial if the business is profitable.
– Tax simplicity: Sole proprietors do not have to file a separate tax return for their business, as they report their income and expenses on their personal tax return.



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