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Private Limited Company

Introduction

The private limited company is a proven, successful business model. The business owners hold all shares of the company privately. Shareholders may operate the business themselves, or hire directors to manage the company on their behalf. Forming a private limited company results in protection of personal assets, access to more resources, financial assistance and greater tax cuts.

Limited Liability

The greatest benefit of private limited companies is limited liability. Private limited companies, according to Apex, are treated as a single entity, making the company responsible for all debts. If anything happens to the company, its members are not personally affected; members are only liable for unpaid shares. 

Tax Advantages

Private limited companies enjoy tax advantages in addition to limited liability. These companies pay corporation tax on their taxable profits and tend to be exempt from higher personal income tax rates. Forming a company instead of continuing as a sole trader or sole proprietor opens the door to more tax-deductible costs and allowances redeemable against profits.

Finance and Resources

When more resources or large-scale production is necessary, forming a private limited company protects the interests of lenders. With adequate funding, your company can produce goods at a lower cost, thus increasing profits and customer satisfaction. Furthermore, the future of the business becomes more secure. 

Business Continuity

Private limited companies enjoy permanent succession because the company is its own legal entity. Shareholders and employees act “as agents of the company,” and therefore, do not effect the company if they leave. In the event of a death or resignation, the company’s Articles of Association allocate the shares to remaining members. Discontinuation of the company only occurs through liquidation or similar means. Guaranteed succession not only benefits members, but secures jobs and resources for the community.