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Should I Transfer my Business to a Private Limited Company? (Part 3)

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Some Advantages of Private Limited Companies.

The main advantage of a private limited company is that it has limited liability. This means that in the event of insolvency the amount a shareholder can lose is limited to the amount the shareholder paid for their shares in the company, together with any loans made to the company.

Of course, a director or shareholder’s potential liability will be higher if they have given personal guarantees of the company’s liabilities, which may be the case if the company has borrowed sums from a bank or other financial institution.

Some Disadvantages of Private Limited Companies.

There is detailed regulation relating to this form of business entity, and there is an administrative burden in compliance.

Just a few of the requirements are mentioned below.

  • On incorporation, the directors must file certain personal information at Companies’ House.
  • There are detailed regulations about the keeping of company registers, which since 6 April 2016 include a register of Persons of Significant Control. Therefore, ownership of the company will be a matter of public record.
  • The company is obliged to prepare and file annual accounts.

If you are considering converting your partnership or your LLP to a private limited company, please do not hesitate to contact BakerLaw’s Head of Company and Commercial Jonathan Craig at or 01252 730 754 to discuss further.