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Types of companies
What is a Limited company?
The standard form is “Limited” as in limited liability and abbreviated to” Ltd.”- this is by far the most common form of company. Some jurisdictions, e.g. Singapore, add “Pte” (for private); thus ABC Pte. Ltd.
What are the benefits of a Limited company?
The principal benefits are:
- Separation of personal and business activities.
- Company liabilities are separate from personal liabilities.
- It allows for passive investors (shareholders) who take no active part in running the company.
- As a separate legal entity, a Ltd company can be sold to new investors yet continue operating without a break.
What is an LLC?
An LLC, a Limited Liability Company, is a corporate structure based on a partnership but with limited liability for its participants.
Do all partners have limited liability in an LLC?
Yes, LLC partners, usually called ‘members’, enjoy full limited liability. The company is run by managers, which can be the same people as the members but don’t need to be.
How are LLCs taxed?
LLCs are different from Limited companies as no corporate tax rate applies. Instead, the members are taxed based on their share of partnership profits. In many cases, there is no tax due even from members subject to various conditions.