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An Overview of Incorporation in Indonesia

An Overview of Incorporation in Indonesia

Incorporation in Indonesia – If you seriously intend to manage your business grows strongly and professionally, incorporating is the answer. Here is an overview of incorporation in Indonesia for your consideration. Managing the business individually means you as the owner is in charge of all aspects in the company.

Those aspects ranging from capital source, profit sharing, decision making, financial deficit handling, and of course, company sustainability. Also, it is difficult to make a bank loan because financial institutions prefer incorporated company. Whereas bank loan is significantly needed for businesses to grow.

Company incorporation works as a legal establishment andit is also the step to define a business strategically. Before you start, here is a closer look of incorporation in Indonesia.

Types of Incorporation in Indonesia

There are types of company incorporation for locals. By learning each type, you will find out which one is most suitable for your business.

  1. Limited Partnership (CV)

Limited partnership or known as CV is the incorporation type where active and passive owner work together to run the business. Both owners are the source of the capital fund and they share the company profit. They also involve in the process of decision making and securing confidential information. Active and passive owners are also responsible for the company sustainability. This type of incorporation will find easiness in making a loan because of the status. However, if financial deficit occurs, active owner is unlimitedly responsible while it is limited to the fund invested for passive owner.

  1. Limited Lability (PT)
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Limited Lability or PT operates more openly since the process of decision making can be accessed by public. In this company type, equity investment as the source of capital fund can be traded. Later, the profit sharing depends on the invested amount. All of the confidential information is secured within the company. Just like the previous type, PT will find easiness in making financial loan because it is an incorporated company. Sharing financial deficit is limited to the fund invested. Meanwhile, the sustainability of the company depends on the directors.

The Advantages of Incorporating

If you still considerately weigh between the pros and cons of incorporating your business, here are some advantages to business incorporating that may help you to come closer to decision.

  1. Protection of the Personal Asset

Owners of an individual business always face risks of unlimited liability both for their business and personal assets. A corporation as a separate legal entity, on the other hand, has a distinct responsible for its own debts. It means that creditors in a corporation can get payment only from business assets. That also means security for the personal assets of the shareholders, directors, and the whole officers. Thus, the business operation will not risk your homes, savings, cars, land, and other personal assets.

  1. More Opportunity to Capital Raise
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The issue of stock shares brings benefit for a corporation since it makes the entity gains more access to capital. Capital raise will surely make your business develops and grows.

  1. Brand Protection

Brand is an essential part of a business. It is an overall image of a company. By incorporating your business, you secure the brand by being used by irresponsible party for their benefit. What is in a brand? It is more than just a logo or tagline.

It is closely related to the way you operate the business, the ambience of your location, and the type of products you offer. Incorporation allows you to secure the business name, brand recognition, and product trademark such as tagline, particular symbol and design that differentiate your business from others’.

  1. Enhance Business Credibility

Easiness in operating a business often time goes beyond financial thing. Credibility describes your strong commitment over the ongoing success of the business venture. Suppliers, consumers, and business partners see more credibility in incorporated business. The status also communicates permanence and stability.

  1. Anonymity or Business Privacy

Prefer a privacy or “business veil”? Then Business Corporation is the answer. By incorporating, your involvement in business may not be known publicly. All of your personal identities are hidden. Many businesses see importance in confidentiality because that way, they can secure secret trade and other business affairs.

  1. Perpetual Existence
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Some may not get a clear explanation of a perpetual existence. As a general description, perpetual existence means whatever happens to those involved in the business, it can still be operational and profitable. By incorporating, you secure your business by being able to avoid business entanglements that could result changing in business structure.

As well as in other places, incorporation in Indonesia will even promise a stronger growth of your business. Not only business itself that gains benefit but also your ability in operating it that will improve by incorporating. You may work with a service agents that will help you with further consideration and finally set up your business.

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