Private Limited Companies

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  • Created by: Howzat
  • Created on: 30-07-18 16:33

Private Limited Companies

Advantages

  • Limited Liability (only responsible for debts of a business only to the extent of value of the shareholders shares)
  • Separate legal identity
  • More flexible than a PLC
  • Financial records remain relatively private (stops competitors from seeing the businesses progress and steal good ideas for example)
  • More capital can be raised through the sale of shares (investors buy a part of the business)

Disadvantages

  • More complex to set up due to increased legal requirements
  • Some loss of control as shareholders have voting rights
  • Unable to sell shares to the public

Evaluation

Very good for larger businesses and tend to generate more revenue than sole traders and have the advantage of remaining more private than PLC's for example. As well as this the business, unlike Sole Traders, does not have Unlimited Liability which means debt wont hit the owners as hard as a Sole Trader would. The more complex system and shareholders that have joint control the running of the business does negatively impact the owners of the business.  

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