What is a limited company? an dhow does it work?
Answers:
Arg, know the answer, but it's too late to go into it now! Sleepy.
limiting means that the directors of the company cannot have personal assets taken to pay for company debts.
kinda means that they can make vast amounts of money and walk away (like the Accident Group).
A limited liability company, to give it its proper name, works on the principle of the investors and owners having a limited liability if the company ceases to trade.
A limited company is a company registered in the UK with Companies House.
It is quite complex in the way it works, lots of rules and regulations to adhere to - go to the website to find out more.
http://www.companieshouse.gov.uk/.
there is also the option of limited liability company (LLC) like feudalsurfer says but more common is a public limited company (PLC)
I have a limited company. It seperates your assets from the company - the company is seen as a seperate entity from you. I went limited because I was looking at a business venture working from home, and therefore if it went bust/I got sued etc etc it would be the company that folded and I wasnt stripped of my assets (ie house!) which was the key thing for me. It meant that whatever gamble I was taking business wise would not mean the kids would lose the roof over their heads. It is more paper heavy mind you and you have strict deadlines to adhere to with Companies House etc for the years accounts and that.
A limited company, ususally written as Ltd, means that literally the owners, directors etc have LIMITED liability for the companies debts.
So if company abc goes bust, that doesnt mean that the director goes bankrupt, the company is deemed as a 'Person' by law and so bears its own liability.
The level of the liability i.e how much liability the owner, director has depends on many factors which are usually drawn up whent he company is formed
a trading entity that has limited liability if it goes bust.
if the company issues £100 worth of shares, i think its limit is £100.
except if the creditors find a means to go after the directors assets ..
Set one up at e.g. http://www.quickformations.com/.
what it does is actually limit all liability to assetts of the firm and excludes private property. I THINK IF YOU SPEAK TO AN ACCOUNTANT YOU CAN BUY ONE OFF THE SHELF FROM AROUND £250+,hewill also be able to explain the limitations of this type of business, like you would work for the company, better ask for a full definition from him
Limited liability means, to put it simply, that should a business fail with unpaid debt, the investors will only lose the money that put in to the company. They wont lose any personal assets eg house, car etc in paying off the businesses debt. Makes the company a more attractive investment possibility because you will only lose what you put in, rather than everything. It kind of follows the 'Business Entity Principle' but that might complicate things.
In a limited company, shares are not open to the public (that would be a public limited company, or plc)
The Company is considered a seperate entity under law (in other words, the company is considered as a seperate person).
When the compay ceases to trade, only 'the company' is liable for any unpaid debts, not the directors or owners. Unless the directors have commited fraud, only then are they liable for any debts. The owners, or shareholders, are only liable for their paid portion of shares, and nothing else.
These are the very basic laws, but can get more complicated under special company formations.
Directors are under obligation to run the company correctly, and to generate profit. They may be replaced by other directors if they fail to fulfull their obligations.
There is actually so much involved, to write it all down properly would take all night. Hope this helps anyway.
There are TWO different kinds of 'limited companies'. There's the private limited company (Ltd.) and there's the public limited company (Plc.). Private limited companies don't not need to declare their finances to the public and competitors can't monitor their financial situation. Ltd companies can all gain a lot more financial backing compared to a business that has a partnership or a sole proprietor owning it. Plc's have to declare their earnings to the public, show how much their shares are worth, etc. Ltd companies are usually family/friends owned. Plc's are businesses where the general public can buy shares. Ltd's can also sell shares but to whomever THEY choose.
if the company is limited and goes bust it means that thay need only pay a limited amount to creditors
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