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Benefits of Small Company

Small Company Definition

As per Section 2(85) of the Companies Act 2013, “small company” means a company, other than a public company:-

  1. paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
  2. turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

Provided that nothing in this clause shall apply to-

  1. a holding company or a subsidiary company;
  2. a company registered under section 8; or
  3. a company or body corporate governed by any special act

As per the recent amendment by the Companies Act 2013, an update has appeared in the definition of small company, which is :-

Small Company meaning now after the amendment made in the Companies Act includes the paid up capital that shall not exceed rupees four crore and turnover of rupees forty crore respectively.

To check the detailed official gazette, check :-

Incorporating a small company provide various benefits. In order to learn what are the benefits of small company, continue reading the article.


Benefits of Small Companies under Companies Act 2013

Small Companies under Companies Act 2013 gives numerous benefits that are mentioned below:-

  1. Only 2 board meetings in a financial year is required in the small company
  2. The compliance of signing the annual returns of small company allows being signed either by a Company Secretary (CS) or a company director. To ease the burden of small companies, an optional signing facility is given.
  3. No requirement to maintain cash flow statement under the bundle of financial statement is the exclusive benefit to small company
  4. There is no compliance for small companies to comply with the rule of auditors rotation
  5. Lesser penalties as compared to other private and public companies are the benefit enjoyed by small company
  6. Benefits of Small firms also includes no demand to file director’s report
  7. Preparing an annual report to be presented in the Annual General Meeting is also not essential under small company compliance
  8. Amazing, under the small company, there is the availability of direct and solely decision making, which means
  9. The compliances of small company involves simpler governance and legal regime.
  10. And the last but not the least merit of small company is that it creates a high amount of job opportunities

I hope now you have got the answer for “What are the benefits of small company ?”. Let us proceed further to know the purpose of small company.

What is the purpose of Small Company?

Small Company is enhancing opportunities for entrepreneurs and the youth of our country. Starting with a small company is definitely a good option as it involves lesser risk and good scope to grow and build a company. As per the SBA knowledge, small businesses have created 8.4 million net job since the year 2000, 4 million more than large businesses.

So, now if you are one of them looking for a job in a big reputed Company or MNC the let me warn you a bit. Growing and learning infinite skills is the major yet best advantage of working in a small company. So, instead of reaching the top of the ladder in one go, it would be better to start with a small step. Doing so will allow you to enhance yourself and your skills too!

Contact EAdvisors regarding any query.

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