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What is A Private Limited Company?


A private limited company is legally constituted with Limited Liability or Legal Protection for its stockholders, but it has ownership constraints.

A Private Limited Company (PLC) is a privately held corporation for small enterprises. The responsibility of members of a Private Limited Company is “limited” to the number of shares that they own. The shares of a Private Limited Company cannot be exchanged publicly.

In short, a private firm is one that is solely owned by a small number of people or other entities who provide money. 




Benefits of Private Limited Company


The private limited corporation is a proven, successful business structure/model. All of the company's shares are held privately by the owners. Shareholders can either run the firm directly or engage directors to do it on their behalf. Personal assets are protected, more resources are available, financial support is available, and tax savings are bigger when private limited corporations are formed.


The following are some of the benefits of forming a private limited company:


Liability is limited



The most significant advantage of private limited firms is their restricted liability. Other than this, private limited businesses are viewed as a single entity, making the corporation liable for all obligations. Therefore, members are not directly impacted if the firm fails; members are solely liable for unpaid share dividends.


Benefits from Taxes



In addition to limited liability, private limited businesses benefit from tax advantages. These businesses pay corporation tax on their taxable profits and are often excluded from higher personal tax rates.


Resources and Finance



Forming a private limited company protects lenders' interests when greater resources or large-scale manufacturing are required. Your firm can make things at a lesser cost with enough capital, enhancing profitability and customer satisfaction. Furthermore, the company's future becomes more secure.


Continuity of Operations




Because the corporation is its own existence, private limited businesses enjoy perpetual succession. Shareholders and workers behave "as agents of the firm," hence their departure has no impact on the firm.


Written by Ibrahim for Future Formations Ltd 2021