Private Limited Company Flashcards
What is a private limited Company
A business owned by 1-50 private shareholders who cannot sell its shares on the stock market (eg, friends and family)
Key features of a private limited company
-owned by private shareholders- shares cannot be sold on the stock market
-Controlled (decision making) by a Board of Directors who run the business on behalf of shareholders
-Must be registered with the registrar of companies at companies house
Advantages of being a private limited company
-More finance can be raised compared to sole traders and partnerships
-Viewed as less risky compared to sole traders and partnerships, so will find it easier to obtain additional finance
-Limited liability - if the business goes into debt, the owners (shareholders) are not responsible for paying it back. They can only ever lose what they have invested.
Disadvantages of being a private limited company
-financial accounts must be published which the public (and competitors) can see
-profits shared between many shareholders by paying dividends
- More complicated and expensive to set up compared to sole traders and partnerships
