In: Economics
Compare between Limited Liability Company and Sole/one Person Corporation
Answer -
Difference between limited liability company and sole/one person
corporation.
1.Ownership -
In case of sole person corporation the owner of the business is
single person but in case of limited liability company it can be
owned by shareholders i.e.(50 or more people.)
2.Decision making -
In sole proprietorship the freedom of decision making is for
business owner.He/she can take any new business venture or take
risks.In case of limited company before any decision making it has
to be discussed in the meeting with all owners of a company and
finally decision can be made after approval of all owners of the
company.
3.Legal entity -
In case of sole trading corporation it isn't regarded as a separate
legal entity but in case of limited company, it has a separate
legal entity distinct from its members.
4.Business starting and set up -
In case of sole person corporation it can be easily started with
minimum documents and nominal amount of registration cost to the
Government but in case of limited company more complicated
procedure is required and more documents are submitted to Registrar
of companies for registration. It involves very lengthy and time
consuming procedure.
5.Liability -
In case of sole trading corporation liability of owner is
unlimited.In case of loss of business his private property can also
be used for payment of debts and liabilities of business.In case of
limited liability company the liability of the member is limited
only his amount of investment in the company is liable for debts of
the company.It provides security and protection to the owners of
the company.
6.Capital investment -
As scope of activities are more in case of limited liability
company their finding requirement is more and big amount of capital
is invested but in case of sole person corporation there is limited
scope of activities and investments in business comparitively very
low than limited liability company.