Incorporation is the steps required to create a corporation. At the end of this process, there is a separate legal entity that is owned by one or more shareholders. This entity is usually identified with the letters “Inc.” or “Limited” after its name.
Incorporation is highly advantageous, for several reasons. First, it protects the shareholders from the liabilities of the business; that is, they are only liable for the amount they have invested in the entity. Second, they can sell their shares to other investors. Third, a corporation can theoretically last forever, and so does not terminate with the death of an owner. The major advantage of Private Limited structure is the segregation of management from ownership. Directors form the management of the company, and Shareholders are the owners of the company. For these reasons, mostly larger organizations are formed through the incorporation process.
The MSME Development Act, 2006 classifies entity into Micro, Small, Medium Category as per investment in plant and machinery as:
