LTDS

Question 1

key terms

1. limited liability
2. unlimited liability
3. incorporated
4. unincorporated

Answer 1

limited liability = when business is not responsible for total amount of debt of a business

unlimited liability = when a business is responsible for the total amount of debt.

incorporated= a business has separate legal identity from its owners

unincorporated= a business has same legal identity as business

Question 2

What is private limited company ( LTD)

Answer 2

An incorporated business that is usually run by family or friends.
- benefit from limited liability.

Question 3

What are 3 advantages of private limited companies?

Answer 3

1. more privacy than plc as it only required to divulge a limited amount of financial information
2. limited liability
3. separate legal identity = continue to exist even if shareholders change.

Question 4

3 disadvantages of ltd

Answer 4

1. can not sell shares on stock market therefore limiting financial opportunities
2. less flexible if expansion needs finance which is more difficult to raise than for a plc.
3. suppliers may view limited liability as a risk.