LO1: private limited companies

Question 1

what is a private limited companies?

Answer 1

companies that tend to be larger than partnerships and sole traders.

Question 2

what is limited liability?

Answer 2

owners/shareholder can only lose the money that they invested into the business, minimises the lose of personal posessions.

Question 3

what are the advantages of LTDs? (6)

Answer 3

-shares sold privately- family business
-shareholders have limited liability
-finance can be raised by selling shares
-likely to have more staff
-staff are likely to have specialists
-extra capital makes growth easier

Question 4

what are the disadvantages of LTDs? (5)

Answer 4

-shares can be sold on the stock market
-decisions may take longer
-expensive to set-up
-have to share profits
-accounts are not private