Most of the advantages and disadvantages of structuring your company as a privately held, limited liability company can be attributed to the company's status as a closely held company. In this post, we look at some of these pros and cons. Disadvantage of being a private limited company; Similarities between a partnership & a limited company ; What does incorporated mean in business? Advantages. Some advantages of partnership over private limited company include ease of establishment and lower costs. and often these types of business have ‘Ltd’ after the business name. A Limited Company is more expensive to set up than a sole trader or partnership. While most companies limited by shares are set up as private companies, in this article we look at the advantages and disadvantages of a public limited company. As the upper limit is restricted, it creates some disadvantages for the company. What are the advantages and disadvantages of a private company limited by shares? The shares of a private limited company are not available to the general public to buy and sell on a recognised stock exchange. It must be registered with Companies House and have a memorandum and articles of association. An unlimited company is very much like a regular private company limited by shares. Unfortunately, you cannot change the limited liability of an existing company from ‘guarantee’ to ‘shares’. Anyone can buy and sell stocks in the corporation, should they be available. Since you will need to make an informed decision when it comes to company registration, here are some points to consider about a private company limited by shares: Although company registration is not particularly time-consuming, a limited company must be incorporated at Companies House. The private limited company is a proven, successful business model. They are separate legal entities. A Limited Company is a great choice for those who would like to bring in other individuals to share the workload (and the risk) involved. Unlike public limited companies, private limited companies are legally restricted from issuing their shares through an initial public offering.As such, they cannot trade their shares on a stock exchange.With this restriction, private limited companies may find it difficult to attract outside investors to buy the shares. Its shareholders are referred to as members. The term “Limited liability” refers to the extent to which the owners are personally “liable” for the debts of the business in the event that the company runs out of money. A Private Limited Company is a company registered with 2 directors & shareholder’s as per the Companies Act, 2013. Shareholders may operate the business themselves, or hire directors to manage the company on their behalf. This article aims to shed some light on what they are, and the advantages and disadvantages of them. Once your company name is registered as a limited company, the name is legally protected and it cannot be used by anyone else; Often, larger organisations will not deal with non-limited businesses; The liability of the shareholder of a limited company is limited to the amount unpaid on any shares issued to them . But whilst forming a limited company offers numerous advantages which are hard to ignore, it does have disadvantages too. Both business models have tax advantages and disadvantages and we would strongly advise you to contact your accountant to discuss these further. Written on: July 14, 2020. Membership is open to the public since shares are sold and bought on the Zimbabwe Stock Exchange. Public limited companies (Plc) Unlike a private limited company, a public limited company can offer shares of the business to the public. Operating as a sole trader is also a very popular structure for businesses of small and medium size. More capital can be raised since there is no limited … Consider this structure if you want limited liability but be aware of strict legal obligations and set up costs. As a limited company, you can sell shares to investors. Shareholders have limited liability. When it comes to forming a private limited company, advantages and disadvantages will arise as with any other decision regarding the future of your business. Each share represents a tiny ownership piece of the corporation, and people who buy the shares receive the right to benefit from their ownership stake. Therefore it also has some disadvantages which are as follows: Limited numbers of members: The first and most common disadvantage is its members are limited in few numbers. To understand the advantages and disadvantages of a limited liability company, let’s take the example of three individuals: Sam, Paul, and Harry. 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