Before discussing the advantages of business registration as Private Limited Company it is necessary to understand what is a Private Limited company?
Every company when registered anywhere in the world has to specify that how much capital the owners of the company are going to invest in the company. This amount is known as the capital of the company for registration purposes. It is not necessary that all the capital is invested in the form of cash but sometimes people also contribute by providing their personal assets to the business such as car, land and other similar things.
When the documents are submitted for registration of company it is necessary to mention this amount. Second thing to understand is that every company that is registered in Pakistan is a separate legal person within the eyes of law it means that all the assets and liabilities of the company belong to it.
Now what is the meaning of word Private Limited that means in simpler words that suppose due to some incident the company is punished with an amount of Rs. 200,000 but the original capital of the firm is Rs. 100,000. So in that case company is liable to pay only Rs. 100,000 because the liability of the company is limited up to the amount of capital and no personal assets of the directors shall be taken into custody for settling any claim of any creditor.
Hence Private Limited Company is the safest form of business registration.