PRIVATE LIMITED COMPANY

Private Limited Company

Setting Up a Private Limited Company

Introduction

Setting up a private limited company engages several actions connected to setting up the organization. The procedure comprises producing of a design for the project. It is called concept development. Studying the design's capability for accomplishment, and making a proper plan for the Private Limited Company. Someone who is starting a new business is called an entrepreneur. In this case they are Bill and Ben. Bill and Ben are taking the monetary risks of the operation, initiation, and organization of the Private Limited Company. They could desire to set up a local, small business arranged as a sole proprietorship (a business operated and possessed by a single individual). the Private Limited Company they have set up, is expected to grow into a big, worldwide Company arranged as a corporation in the future.

This paper advices Bill and Ben who are in the process of setting up a private limited company regarding their duties as promoter of that company and any potential liability for contracts entered into before incorporation. This paper also discusses issues Bill and Ben may face.

Discussion

A Private Limited Company is different from a Public Limited Company in so far that it is usually set up by a few owners (like Bill and Ben) who also become the shareholders of the Company. The key to creating and starting the new business venture successfully is to look at the window of market opportunity, create and fit the new business strategy, and then measure the appropriate risk, considering whether or not the opportunity fits personal goals and needs. Assessing viability requires analyzing a venture's ability to not only profitably win customers, employees, and resources, but also to secure financing. (Macintyre 2012, 46)

Before a business can be lawfully recognized in the UK, Bill and Ben must decide what type of business they are establishing. This decision will determine two important things: who will be liable for the private limited company and which income tax return the owner will have to file. Corporation, partnership, sole proprietorship and are the most common types of businesses. In a sole proprietorship and a partnership, the owner or owners are financially liable (responsible) for the debts of the business, and they control any profits that the business makes. In a corporation, individuals called shareholders invest money in the business and receive partial ownership of the company. The shareholders are not held financially liable for all the debts of the business. If the business does not succeed, the company's shareholders lose only the investment they put into it. If the business makes a profit, the shareholders gain a percentage of that profit based on their share of ownership. (Charles 2007, 35)

The opportunity should be based on a distinct “competitive advantage” that creates a “barrier to entry,” preventing others from following. A competitive advantage may be based on an invention, unique “intellectual property” like software code, or the Bill and Ben may be a “domain expert” having unique insight ...