Home » Pros and Cons » 14 Pros and Cons of a Public Limited Company. 1. You’ll experience double taxation at times. 6. You might end up working for a household name, which looks great on your CV and also impresses the people that you meet. But what you need to consider if whether the move is right for you and your business. But this is not necessarily the ideal choice for everyone; starting a limited company can be complex and create a number of issues that you will need to deal with. Unless you used your home, your vehicle, or other assets as collateral to get the business off the ground, these items are never at risk as you operate your business. 5. Pros and Cons of Forming a Corporation. G4S Asks Investors to Reject GardaWorld Takeover Bid, The Future of Private Banking in the Age of COVID-19, BoE Governor Suggests Negative Interest Rates Best in ‘Economic Upturn’, Robinhood Hackers Infiltrated Almost 2,000 Accounts, BoE Governor Suggests Negative Interest Rates Best in ‘Economic…. The pros and cons of sole proprietorships vs S Corporations explained. By AllBusiness Editors | In: Financing & Credit. The pros and cons of a PLC show that going public is generally a good thing. If your company experienced a devastating loss for almost any reason and had to shed its assets to pay creditors, then your personal assets would not be at risk like they would be in a sole proprietorship or some partnerships. You receive the opportunity to raise the capital that you need. Hi, I'm Oliver, the Editor for our Online Content. 3. Of course, it also comes with benefits such as a more favourable tax situation and a more professional appearance. The goal is to attract the best talent and most PLCs and their shareholders are willing to invest more into these salaries so their own financial stability can be achieved. As long as the negatives can be proactively controlled, it is generally the next stage of evolution for every business. You’ll also be hosting a shareholder meeting at lease once per year, if not more often. If you are the founder or principal owner of a business that goes public, then your path toward an exit becomes much easier to make. If you can create success, then you’ll be building the foundation for even more success later on down the road. From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors, 14 Pros and Cons of a Public Limited Company, 22 Limited Liability Company Advantages and Disadvantages, 23 Pros and Cons of Using LLC for a Rental Property, 12 Capital from Profits Advantages and Disadvantages, "From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors. Small Business Obtaining Financing Entrepreneurship 101 Basics Freelancing & Consulting Operations. You’ll be investing manpower into the creation of the reports that are required to be submitted for regulatory compliance or you’ll be contracting that need out to others to do the work on your behalf. This includes removing the existing managers and executives if they so choose because they have the largest voting block. If a group of shareholders is able to take a majority control through the purchase of shares, then they can dictate the direction the company takes. Perhaps you already keep personal and business assets separate on a financial level and think incorporating is not worth the hassle. A company must also release what their ongoing business strategies happen to be, what compensation arrangements have been formed, and even what executives are earning as a salary. The Advantages. Financial results that aren’t as positive as some investors would like to see, combined with high salaries and other expenses, can drive the value of shares lower. Customers know that a public business isn’t just going to disappear the next day with their hard earned cash. Although not every PLC will pay out extensive dividends to shareholders, you’ll still be paying out more of your profits when you have taken your company public. 4. There are many more reasons why you should incorporate your business, and only a few reasons not to. Let’s look at the disadvantages of incorporation first: As far as advantages to incorporating, most businesses will choose one form of incorporation — a C corporation, an S corporation, or limited liability company (LLC) — solely to protect the business owner and stockholders from personal liability for the business’s debts or actions. If you’re going public, then you’re going to be selling shares of your company. The pros and cons . Some of the major positives include: if the business incurs debts, your personal finances and assets are protected. However, there is another: operating as a limited company. The Pros and Cons of S Corporations. Let’s compare three types of businesses that do the exact same thing. Most folks would say the PLC because being public gives the company added credibility and value. There will be more expenses. In other words, a corporation keeps your business dealings, assets, and bank accounts separate from your personal assets. If you run a small business you may currently function as a sole trader – this can be a great way to work and can be very effective for many people. 2. Because public stock has a value associated with it, often higher than shares that are privately held and traded, they can be used to purchase additional assets that your company may want or need. Think again. In this article we will take a look at the pros and cons of setting up a limited company rather than being a sole trader. You still have a limited liability in case something bad happens. Depending on the purchase, the entire acquisition could potentially be paid in stock if you so wished. Each structure has its own individual advantages and disadvantages based on its taxation rules, organization, and administrative overhead. It gives a business more resale value. Because there is more capital involved through the sale of shares and because there is a need for high quality managers to continue profitable growth, compensation levels can be quite high at a PLC. Business Finance Accounting Supply Chain Basics Small Business Operations & Technology Law and Taxes. In case the private limited company has debt and losses, the only liability by the shareholders is only up to the amount they individually invested. Laws and Taxes Business Types Income Taxes … Stock can also be used as a benefit through the issuance of stock options, giving you much more financial flexibility. Unlike a sole proprietorship or a general partnership which requires very little paperwork, you’ll need to file a large amount of documentation to take your company public. Many bigger businesses are at least a private limited company rather than a sole trader or partnership.