1. Limited risk to personal assets – The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you. The shareholders do not have any personal liability and hence need not pay for the company’s liability out of their own assets. 

2. Legal Entity – A private limited company has a separate legal entity different from its directors and shareholders. This means that the company is responsible for the management of its assets and liabilities, debtors and creditors. The shareholders will not be held responsible for the losses of the company. So, the creditors cannot proceed against the directors or shareholders to recover the money.

3. Raising Capital – Even though registering a private limited company comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.

4. Trustworthiness – Companies in India are registered with the Registrar of companies (ROC) under the Companies Act 2013. Anyone can check the details of the company through the Ministry of Corporate Affairs (MCA) portal. Also, details of all the directors are provided while the formation of the company. Hence a private limited company form of business structure is trusted more.

5. Continue Existence – A company has ‘perpetual succession’, i.e. continue or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or cessation of any member but continues to be in existence irrespective of the changes in membership.