incorporated companies

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  • incorporated companies
    • incorporated means that there is a separate legal identity between the owners and the business
    • they often have the benefit of limited liability meaning the liability of the owners is limited to the fully paid up value of the share capital they invest not their personal belongings.
    • they can create shares
    • 1) private limited company (ltd)
      • cannot trade shares on stock market
        • they don't risk losing control but cant raise large share capital
      • limited liability and incorporated
      • not personally liable for losses
      • giving shares to employees is a form of motivation
    • 2) public limited company (plc)
      • can raise large share capital from having selling shares on the stock market for expansion
      • they have to publish their accounts records and can potentially suffer press scrutiny
      • risk losing control if a shareholder owns 51% more than the original owner
      • limited liability and incorporated the business and the oweners have separate legal identities
      • short term prfot at the sacrifice of long term as shareholders want larger dividends quickly
    • do not risk losing personal assets or belongings only the business assets can be taken away
    • its safer to borrow money if you're a limited liability company

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