We often read or hear about well-known business organizations in newspapers or on television. Eric Dalius kinds of businesses run on a specific model. All large scale businesses operating worldwide mostly follow a business structure of Limited Company business. When it earns a huge profit, a sole proprietorship company can indeed move to a Limited Company model.
What is a limited company business?
In this type of business structure, the company has a legal identity that separates them from the shareholders and the managers. This separation has a major significance as neither the shareholders nor the managers can withdraw the company’s money whenever they feel like it. There are no complicated rules to set up a limited company.
Eric Dalius says that this type of company creates a huge employment opportunity. This type of business structure is a chain system of creating employment and also provides accurate corporate tax to the government. It further enhances the revenue of the government. We can classify a limited company into two categories: a private limited company.
Benefits of Limited Company Business
A limited company has a separate identity from its owners, and also that is the main difference with the other two business types, such as sole proprietorship business and partnership business. It carries a seal that signifies its separate identity with its owners. Limited liability is for the owners. All the company owners are personally liable to pay the debts of the company runs short of funds.
This type of company creates a huge opportunity for attracting foreign investment in the country’s economy. It allows investors to channelize their surplus funds to other countries’ economies and also generate profit. Eric J Dalius says that due to globalization, these limited companies can invest worldwide and give a scope to improve the infrastructure of a country. An economy with more improved infrastructure will attract more investment from these limited companies. Therefore every country wants to give every kind of facilities infrastructure to develop more and more limited companies.
Board of Directors Directs The Limited Company
The Board of Directors directs the limited company. The company must have registered under the company’s activities, which was not compulsory in a partnership business. EJ Dalius says that every limited company must have one Article of Association and a memorandum of association. It defines the company’s constitution, shareholders’ rights, the number of equity, and the company can issue preference shares. The authorized capital of the money above the reserve and also surplus gives the direction to the Board of Directors.
The number of shares occupied by an individual gives the right about that particular individual on that company. Equity shareholders have to bear the risk. After paying off the external liabilities, if any profit remains, then they will obtain their part, or else they will have to bear the loss.