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

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farouk23 eNotes educator| Certified Educator

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