Private limited companies (LTDs)

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Small businesses...

... can be set up as a sole trader, partnership of a private limited company. 

  • For a private limited company the start up capital may be as little as £100. 
  • Can be wholly owned by the entrepreneur or other people bought in as investors.
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  • The shares of a private limited company cannot be bought and sold without the agreement of the directors. 
  • Company cannot be listed on the stock market meaning that it's possible to maintain close control over how the business is run. 
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  • A legal requirement for private companies is that they must state 'Ltd' after their name. 
  • Warns those dealing with them that the firm is relatively small and has limited liability.
  • Cheques of a limited company are not as secure as ones from an unlimited liability business.
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Why a business may want to be an Ltd

  • They may want to expand quickly and therefore needs it to be easier to raise extra finance.
  • If they want to borrow a large amount of money and want a safety net.
  • IF the owner wants to go on hiliday or is ill etc someone else can make decisions for them while they're away 
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