Their personal assets, the salary earned as an employee of the company, real estate properties, etc. Its credit standing is lower than that of a public company. Some disadvantages include complex accounts, public records and accountant fees. December 17, 2020. Just like any other type of person, a company being an independent legal entity, can initiate legal action against any other person and similarly can be sued in the court of law. Smaller resources: A private company cannot have more than fifty members. Advantages and Disadvantages of Setting up a Private Limited Liability Company. A complete breakdown of limited company advantages and disadvantages. Pros and Cons of a Private Limited Company Pros Limited Liability. As the director of a Private Limited Company, you will also have a number of legal duties, including an obligation to safeguard the company’s assets. Disadvantages of a private limited company There are some disadvantages of a private limited company of which you should be aware. The limited company business structure is the second most popular in the UK. Therefore, the financial and managerial resources of a private company are comparatively limited. Private Limited Companies enjoy the advantage to carry out legal proceedings and to bring a suit in the court of law. Disadvantages of Private Limited Company • Registration Process Private limited company registration on average takes about 10 – 20 days and costs Rs.13000 (all inclusive) through STARTUPEDGE.IN. Hence, registering a private limited company involves a process and costs which are not applicable to an unregistered entity like proprietorship. There is more paperwork and time associated with running a limited business than when operating as a sole trader, which can be off-putting for some. In a private limited company the number of members in any case cannot exceed 200 . Failure to fulfil these duties can lead to a fine or, in severe cases, a prison sentence. Private limited company is an ideal business entity for a majority of medium and large sized business, as it offers a host of advantages from liability protection to easy transferability. A private company suffers from the following limitations: 1. In case the private limited company has debt and losses, the only liability by the shareholders is only up to the amount they individually invested. However, operating as a private limited company is not ideal for all businesses, especially micro or small enterprises. Advantages and Disadvantages of Setting up a Private Limited Liability Company. Disadvantages of a Private Limited Company: One of the main disadvantages of a private limited company is that it restricts the transfer ability of shares by its articles. Disadvantages of Private Limited Company. The 4 disadvantages of a private limited company: An up to date guide. 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