less of Accession Private Limited companies now remember Private Limited companies are a type of incorporated organization or incorporated business and a private limited company or an Ltd is a company that is owned by its shareholders but is managed by its a director and shareholders will choose the director now the key features of a private limited company number one is that shareholders unknown to the company and it is theoretically possible to have as little as one shareholder and because shareholders choose the directs and the shareholder in that case could choose themselves as a director but in many cases private limited companies will have 20 30 40 50 shareholders and they must decide who the director is number two is that shares are not sold on the stock exchange that is something that a public limited company would have and number three is that shareholders and losses are limited to their investment so in the case that a company would become bankrupt well their personal wealth their personal assets are protected protected by limited liability but what they've invested into the company when that may be sold off to pay off those debts well that is not protected but what is protected is their personal assets and their personal wealth now that leads into the first key advantage of a private limited company which is limited liability and limited liability is that shareholders personal possessions are not at risk as we discussed therefore that might encourage them to invest in a private limited company compared to an unincorporated business number two is you who have additional source to finance here because if you're a private limited company you're able to raise finance through selling shares so that's the type of equity finance and also you would have the ability to raise debt financed through for example loans so you've got debt and equity finance available to you number three is that you have control because you're a private limited company you have control over who the shareholders are so therefore you have less risk of the fact that could be conflict between owners and managers and something that's more likely in the case of a public limited company because in that case they do not have control over the chef who who the shareholders will become so therefore they are faced with this problem being the divorce of ownership and control and the final one is well sometimes it's seen that when you're comparing a sole trader to prevalent company well seen as having higher prestige and that might generate more sales now the cons of a private limited company the first one is because we said here shares are not sold in the stock exchange they have no access to the stock exchange so therefore a smaller volume of finances probably available remember you're a public limited company there are enormous enormous amounts of finance that you can generate number two is we were a private limited company so you need to share your profits amongst your shareholders and the more shareholders the means the more diluted your profits may become number three is it's a legal requirement to publish your financial accounts that's compared to if you're a sole trader or a partnership well you don't need to publish them so your competitors may be able to see your financial accounts number four because of number three is there's more bureaucracy there's more administration that needs to take place versus and an incorporated business such as a sole trader you've got to do corporation tax and you need to register your business in two company accounts need to be done using register it with a company's house and also with those corporation taxes will have to dealt with with the Inland Revenue so that's the pros and the cons of private limited companies but if you get a question about prevalence of companies it might be whether you should be a Ltd or private limited company or a PLC a public limited company now when you're doing that you need to think about that excellent pneumonic that is plums let's go for implants so plums being how the profits are distributed limited liability unlimited liability management and control and source of finance with this one would probably start the bottom so if you are deciding to be one of these two business structures if you think about the S sources of finance or the key thing is do you want to have access to the stock exchange because if you're a public limited company you will have access to the stock exchange if you're a private limited company who won't have access to the stock exchange and depends what you need and how much financially need to how important that is because you might need that finance to look to expand the business now going back to the P being how the profits have distributed well it could be the question of if you move from a private limited company to a public limited company will the profits be higher if you're able to get that financed from the stock exchange and you're able to ultimately make more profits and therefore the overall profits will be higher to you so you need to make that consideration there now clearly if it's a private limited company to a public limited company or the L in the use of limited and unlimited liability don't make much difference here because you're clearly in both cases going to have limited liability whether you're a pro a limited company or a public limited company you have a limited liability both times so you retain it effectively and the last one is the M sort of management and control or the key thing there between a private limited company a public limited company is this point here so if you're a private limited company you can control who the shareholders are so you're less likely to have that problem with divorce in control versus in the case of a public limited company perhaps well you might have that issue of divorce and control even more and that could lead to problems now one last consideration is if you are deciding between a private limited company and a sole trader is that if you're a private limited company you would be paying corporation tax and if you're a sole trader then you would pay paying income tax and it usually goes that the more profits that you're making it would make sense of a tax perspective that you would want to pay corporation tax because it would mean your overall tax bill would be smaller and therefore you retain more profits but I hope that helps with private limited companies and I'll see you at the next session [Music]