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The Importance Of Setting Up A Business Entity For Those Of You Who Want To Do Business


Sep 28, 2020
The Importance Of Setting Up A Business Entity For Those Of You Who Want To Do Business

Setting up a business entity is one of the first steps to building a successful and growing business. In starting a business, what must be prepared first? Many people will certainly answer that the first thing that must be owned is capital. The size of the capital will depend on the type of business you are going to start. However, before starting an actual business activity, there is one more thing that must be carefully considered: establishing a business entity. Setting up a company with legal status does require a fairly mature capital and process. This is why there are still many businesses in Indonesia that postpone the legality and completeness of their company documents. There are many reasons behind this decision. from lack of capital to avoiding taxes that are thought to reduce profits.

Benefits of Establishing a Legal Business Entity

In fact, there are many advantages that an entrepreneur will get by establishing a legal business entity. In addition to being safe for the company’s business activities, these advantages can also bring great economic benefits. Here are some of the benefits:

Get Legal Protection

A company without a legal basis can be sued or terminated at any time. By establishing a business entity in the form of a Limited Liability Company (PT), your company has been approved, recognized, and listed on the company list of the Ministry of Law and Human Rights . This means, your company name will not be used by other companies. Meanwhile, in CV, the company name or trademark does not belong to the property so that there may be similarities with other companies.

Clarify the Separation of Personal Property from the Company

Limited Liability Company business entities have a requirement to separate personal assets from the company. So, the company’s financial management will be more regular and have clear boundaries. It also allows you to have your own savings in the bank on behalf of the company. As the owner, you will get a profit sharing according to what has been determined. This will make it easier to sell and distribute shares in the future. With the separation of personal and corporate assets, profit sharing and company financial management will also be more orderly.

Supporting Professionalism in the Company

Without a clear legal basis, many consumers will doubt the quality of the service or product you offer. Of course, consumers will prefer companies that are professional and bona fide. Because it is registered with the Ministry of Law and Human Rights, this means that you have fulfilled the requirements as an official company. That way, the level of consumer confidence in your company will increase. In addition, a company must have a well-ordered structure and organs. Shareholders, the board of directors, and the board of commissioners will hold a General Meeting of Shareholders (GMS) to determine the responsibilities and capacities of each position as well as to carry out business planning every year. Because business management and supervision is carried out by different company organs, business activities will run more effectively, professionally and be accountable.

Have Ease in Doing Business

On your business trip, the opportunity to get a big project will come. Often times, bidding processes from private companies or government agencies require participants to complete company legality documents before entering the bidding process. Having an official business entity will help you get these projects.

Working on private and government auction projects will not only bring huge profits, but your company will also have a good business record and gain more trust from consumers.

Make it easy for companies to get additional capital

In the future, you may need additional capital to enlarge the scale of your company business. Completeness of business legality can help you to apply for additional capital from the bank, or invite investors from within and outside the country.
Automatically, creditors such as banks will have more confidence in providing loans if the debtor has a clear business entity. Furthermore, every share that is in a PT can be sold to domestic or foreign investors. In addition to increasing capital, this will certainly affect the development of your business.

Extending the Lifespan of Company Activities

A Limited Liability Company or PT can continue to run even if the owners or initial management are not directly involved in the business. Shareholders can monitor the business through a board of directors or commissioners who have been appointed.
In other words, a company in the form of a PT can even be inherited, transferred, or traded to other people in accordance with the GMS and a written agreement.