Question

In: Economics

Compare between Limited Liability Company and Sole/one Person Corporation

Compare between Limited Liability Company and Sole/one Person Corporation

Solutions

Expert Solution

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.


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