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Private Limited Company - Advantages and Disadvantages

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Introduction

Definition A private limited company (LTD) is a business that is unable to float its shares on the stock exchange, however it may issue its shares to friends, family and employees. This type of company can be registered by having a LTD at the end of their chosen name. Basis Unlike the sole trader and partnership business previously mentioned, the legal position of the company is completely unaffected by the death or retirement of one of its shareholders. Shareholders enjoy the privilege of limited liability, which means they are only liable to meet the debts of the company only to the extent that thy have invested into the business. ...read more.

Middle

There must be a minimum of one shareholder and at least one director. To set up a business such as a LTD (Private Limited Company), one must register with the registrar of companies at Dublin's castle. A Memorandum of Association must be prepared which establishes the company and determines the objects the business, which it is to conduct. Additionally, the Articles of Association must be prepared, which contains the internal constraints governing the conduct if the company as between the shareholders and the board of directors of the company. ...read more.

Conclusion

* If you are expecting large profits from your business, being a LTD company may provide more advantageous tax treatment. * The Companies Act provides a standard and convenient management structure for you to follow. * Able to gain tighter control of your company as you decide whom you issue shares to. * A LTD has a greater status than of a sole trader or a partnership. Disadvantages * The legal requirements, which have to be met before you can operate the business, are quite complex and lengthy. * Annual accounts must be audited by the company's house, which could be costly and time consuming to prepare. * The public have access to your companies annual reports therefore you have less business privacy. ...read more.

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