What are advantages, disadvantages of private limited company?

A private limited company is a company usually held for a small business. The liability of the members of a private limited company is limited to the amount of shares respectively held by them. Private company shares can not be publicly traded.

A private company is owned by individuals and is solely responsible with its entire assets for the business operation. The business registration form of a private limited company is usually a registration with a minimum of two people.

The protection that the limited liability provides to the shareholders, the ability to raise share capital and separate legal entity conditions makes it the most recommended business entity type for millions of families and professionals that manage small business and medium-sized businesses.

What are the advantages and the disadvantages of a private limited company?

The advantages of a private company:

The limited liability

If a company has financial difficulties for any reason, the personal assets of the shareholders will not be used to pay the company’s debts. In contrast, sole proprietorships have unlimited liability.

Free and easy share transfer

Shares of a private limited company in shares can be transferred by one shareholder to any other person. To make this process effective shareholders should submit and sign the share transfer form and hand it over to the share purchaser along with the share certificate.

Continuity of existence

Unlike a sole proprietorship, The advantage of a private company is a separate legal entity. It can exist indefinitely even with the death or inability of the owners “Permanent inheritance” is one of the most important characteristics of the company.