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COMPANY :,) - Coggle Diagram
COMPANY :,)
Private limited companies:
Weaknesses
:
Legal duties, 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. Failure to fulfil these duties can lead to a fine or, in severe cases, a prison sentence.
In a Private Limited Company the number of shareholders in any case cannot exceed 50.
Administration, you may have to spend more time on paperwork.
Strenghts:
Taxed efficent, paying 19% Corporation Tax on profits, rather than the 20 – 45% Income Tax paid on sole trader profits.
Professional reputation, limited companies are much more closely monitored than other structures, with statutory compliance obligations and reporting requirements in place.
Limited liability, a Private Limited Company is a legal entity in its own right, allowing the business owner to keep their assets separate from the business itself.
Public limited companies:
Strenghts:
Offering shares to the public gives the opportunity to spread the risk of company ownership among a large number of shareholders. This may allow early investors in the company to sell some of their own shares at a profit while still retaining a substantial stake in the company.
A public limited company will often find itself in a better position when looking at other potential sources of finance.
The ability to raise share capital, particularly where the company is listed on a recognised exchange.
Weaknesses:
To help protect shareholders, the legal and regulatory requirements for a public limited company are more onerous than for private limited companies.
With a public limited company, it’s much harder to control who is a shareholder of the company, and who the directors are ultimately accountable to.
The minimum financial commitment is higher for a public limited company than for a private limited company.
Sources:
https://www.informdirect.co.uk/company-formation/public-limited-company-advantages-disadvantages/
https://ebizfiling.com/blog/advantages-and-disadvantages-of-private-limited-company/
https://stonebridgepay.com/limited-company/resource-hub/advantages-disadvantages/