UK Companies Limited: UK Private Limited Company. Its credit standing is lower than that of a public company. Not only it is time-consuming, but it is also quite a complicated affair. A private limited company differs from a sole proprietorship in that the latter is owned by a single individual who is personally responsible for the business debts and essential to its continued existence. Audited annual returns and accounts have to be made to the Registrar of Companies. There i… The shareholders are also restricted from transferring or selling shares to people who are not members of the company. As a legal obligation, private limited companies must appoint at least one director, who also may be a shareholder. Complex administration: Compared to running a business as a sole trader the administrative affairs of a Limited company are more involved. Advantages & Disadvantages of Private Limited Company. Though they have many advantages, including shareholders' limited liability, the ability to make agreed-upon business decisions and business stability--the business is not interrupted by events such as the death of a shareholder, for instance--there are also many disadvantages. Every Company has Legal formalities like Filing the Annual Returns, Income Tax Filings, Meetings, Records of Meetings, Invitation for the Meetings, Shareholders Meetings, Separate Directors Meetings, etc. Consider this structure if you want limited liability but be aware of strict legal obligations and set up costs. Disadvantages of a Private Limited Company Restricted Shareholders: In a Private Limited Company setup, the number of investors can not exceed 50 people. In the forthcoming article, the advantages associated with each of these business forms would be examined and analysed. The most common form of carrying business is through incorporating a company. That is why before setting up of an Ltd company the entrepreneurs should consider all options and then make their final move keeping in mind about the future possibilities. Uncategorized. Following is the … The major disadvantages of a private limited company can be summarised as below:-1. A company is a distinct legal entity separate from its shareholders or officers. As the director of a Private Limited Company, you will also have a number of legal duties, including an obligation to safeguard the company’s assets. In case of debt, profit or loss the company is wholly liable. A section 8 company yields an array of benefits, unlike a Society or Trust. Disadvantages; A Private Limited Company is a corporate body, seen in the eyes of law as a juridical person vested with rights and obligations to which it must comply. With this restriction, private limited companies may find it difficult to attract outside investors to buy the shares. It also tags the company with the status of being proficient thus increasing the market value of the company. A private limited company … Some disadvantages include complex accounts, public records and accountant fees. The company is owned by shareholders and they enjoy “limited liability” – i.e. Or, when the contract or the agreement concerning the company stands faulty on legal grounds or any discrepancy is found regarding the management of the private limited company. This amounts to an inefficiency, since investment decisions may not be … Growth may be limited because maximum shareholders allowed are only 50. Advantages of a Private Limited Company Increased Liability: Taking a private company public increases the potential liability of the company and its officers and directors for mismanagement. For instance, private limited companies must submit annual financial accounts to the Companies House at the end of each financial year and report a number of changes, including appointment of a tax professional, to HM Revenue and Customs. As such, they cannot trade their shares on a stock exchange. 10,000/-. Our that comes with business. They are very popular when it comes to conducting the business. Disadvantages of a Private Limited Company Bookkeeping complexities. The government has launched a composition scheme for businesses that are involved in the unorgani... All the companies with turnover more than Rs. The cost of incorporating a Private Limited Company is very high in comparison with the capital invested. The limited company business structure is the second most popular in the UK. The government recently introduced the concept of One Person Company in which only One Person can be the shareholder of the company. Another disadvantage of private limited company is that it cannot issue prospectus to public. Disadvantages Of The Private Limited Company. Specific rules and regulations are to be followed while naming an Ltd company, thus a lot of care is required to select a name which is in adherence to the law. In India, a company can be incorporated as one person company, public limited company and private limited company. Their personal assets, the salary earned as an employee of the company, real estate properties, etc. Disadvantages of private company limited by shares. Setting up a private limited company in Singapore is cumbersome as there are strict requirements under the Singapore Companies Act that must be complied with at all costs. However, most of these perceived disadvantages pale in comparison to the tax advantages, enhanced professional image, and limited liability protection you will enjoy. Moreover, Post Incorporation Compliance cost more than 18,000/- annually. 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