IGCSE, A Level Business Student Forum

Talha Asim wrote: ↑Fri Nov 03, 2023 12:18 am (Kn) limited liability (an) this means the owners are limited to what they invest and wont be held responsible for debts of the business (an+) this will encourage investment as investors wont be afraid of taking the fall if the business fails

(Kn) more investment (an) since the it is a limited company people will invest into the business, more investment hence more funds hence more spending (an+) this will encourage the firms the company can use the investment for new business ventures

Good Answer

[KN] limited lability
[AN]this means the owners are limited to what they invest and wont be held responsible for debts of the business
[AN+] this would be beneficial for the business as this would encourage shareholder to invest more

KN]Separate from business.
[AN]can raise capital by selling shares to investors without going into public
[AN+]this allows the business to attract funding for the expansion and development

[Kn]Limited Liability
[An]This means that the shareholders' assets are protected if the company goes into liquidation. Any company's money remains with the company and does not fall on the owners' shoulders.
[An+]Thus it protects new businesses assets from potential business failures.

KN] Funds Collection. [AN] By issuing investors with shares, it can raise money and potentially promote additional fund raising
[An+].As a result, this will promote growth and present chances for expansion.

[KN]Availability of more finance
[AN]Shares can be transferred to more people hence they can bring in more capital investment into the business
[AN]which can help in expansion


[KN]Less or no dilution of control
[AN]As shares of a private limited company are not listed on stock market therefore they cannot be transferred without consultation of the original owners.
[AN] hence original owners can maintain control easily

[kn] easy to seek investments
[an] investors are attracted to private limited companies due to lower risks for them
[an+] access to a broader selection of investment funds for growth of business

[kn] limited liability
[an] business and owner are seperate identities
[an+] debts do not affect private assets of the business

KN: Access to Capital
AN: Private limited companies can raise capital by issuing shares
AN+: Thus attracting investment
KN: Privacy of details
AN: Financial information is not as publicly shown compared to public companies
AN+: providing a level of privacy for company operationsand information

(KN) more shares could be sold to the people preferably family members such as friends etc,
(AN) thus due to this the business will be able to gather more capital then the partners ever could have and invest it,
(AN+) which will hence help to develop the business more effectively, also leading it towards it's expansion rapidly.

(KN) shareholders have limited liability
(AN) due to this if the company failed, the creditors can't force the shareholders to sell their possessions to pay the debts, as the shareholders liability is limited to that what they invested and hence they would only lose that investment,
(AN+) thus due to this it saves shareholders from losing a lot of money , and encourages them to buy more shares due to this.