Homework Help

What are some of the advantages a business would have if it converts to a private...

user profile pic

solankidimple11 | (Level 1) eNoter

Posted August 19, 2013 at 3:28 PM via iOS

dislike 1 like

What are some of the advantages a business would have if it converts to a private limited company?

1 Answer | Add Yours

user profile pic

farouk23 | College Teacher | (Level 1) Associate Educator

Posted October 4, 2013 at 8:54 PM (Answer #1)

dislike 0 like

A private limited company or limited liability company is a business entity that offers almost all the legal liability protection benefits of a C corporation, without the added compliance and reporting burdens. There are many reasons why a company may convert from a regular C corporation to a private limited company, ranging from market forces to issues of management and organization. Some of the major advantages of a private limited company are:

  1. Limited amount of allowable shareholders
  2. Shares cannot be publicly traded
  3. Places pre-defined restrictions on share ownership
  4. Prevents hostile takeovers
  5. Flexible profit sharing
  6. Double taxation avoidance 

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes