What are the benefits of a private limited company over proprietorship firm?

Question

What are the benefits of a private limited company over proprietorship firm?

Answer 1

Pvt Ltd Co. cannot s***w you bec they have rules. You can sue them if they s***w you. Proprietorship cos. s***w you. They are lala cos., so to say. You have to get screwed or quit.

Answer 2

Benefits only:

1. Liability: The foremost benefit is of limited financial liability for the promoter / entrepreneur. Nikki W has explained this very well in simple language in the 2nd para starting with From a legal stand point.....

2. Perpetuity: The continuity in business in legal terms remain perpetual in case of a private limited company where as in case of proprietary, with the death of the proprietor the business comes to an end.

3. Independence of business: The business of the company is separate from its owners, from legal point of view. The owners -  shareholders, except in certain situations like breach of trust etc., are not identified with the business of the company as the company in itself is an independent artificial person which can do each and every thing of its own, except marrying and casting vote in country's elections, and runs its business through its duly elected management. Therefore, the owners of the business (shareholders) can't be sued or prosecuted directly for the misdeeds/faults of the company or its officers/agents.

4. Bigger commercial status: The company form of business enjoy bigger commercial status, hence , can enjoy bigger business/projects, bigger financing, bigger infrastructure and bigger name.

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7.8..9........more and more from professional point of view but for common understanding, the above four benefits can make one understand the rest of the benefits to flow.

Answer 3

I think you mean limited liability company versus proprietorship.  

From a legal stand point, limited liability company protects your personal assets, like your home, your personal car, etc in case of a law suit as the name indicates.  In a proprietorship, they can go after everything you own down to your underwear.

From a tax stand point, limited liability company's income and losses flows through to the owner, just as in proprietorship.  So, if the company operates at a loss, you can offset other income items you might have for the tax year.

From a filing perspective, limited liability company needs to be filed in state and fed, while proprietorship is pretty much file-free.

If you have assets you need to protect, form a LLC.  If you have something very simple with very little risk for law suit, go for the proprietorship.