What Is A Private Limited Company

Private Limited Company: A Beginner's Guide

What is a private limited company?

A private limited company (Ltd) is a type of business structure that is separate from its owners. This means that the company can own property, enter into contracts, and sue or be sued in its own name. The owners of a private limited company are called shareholders, and they are not personally liable for the debts of the company.

Benefits of a private limited company

There are many benefits to setting up a private limited company, including:

• Limited liability: As mentioned above, shareholders are not personally liable for the debts of the company. This means that their personal assets, such as their home or car, are not at risk if the company gets into financial difficulty.
• Tax efficiency: Private limited companies pay corporation tax on their profits, which is currently set at 19%. This is lower than the income tax rate that individuals pay on their earnings, which is up to 45%.
• Credibility: A private limited company can give your business a more credible and professional image. This can be helpful when you are trying to attract customers or investors.
• Easier to raise finance: Private limited companies can find it easier to raise finance from banks and other lenders than sole traders or partnerships.