What is a disadvantage of being a private limited company?

Being a private limited company does come with certain disadvantages, one of which is the high set-up costs. When starting a private limited company, there are various expenses that need to be considered. These can include legal fees for registering the company, initial accounting fees, costs for compliance with regulatory requirements, and potential costs associated with office space and equipment. The need to comply with legal and regulatory frameworks often means that the initial financial outlay is higher than other business structures, such as sole proprietorships or partnerships.

In contrast, raising finance is generally easier for private limited companies because they can issue shares to a limited number of investors. Unlimited liability is not applicable to private limited companies, as owners' personal assets are protected. Lastly, while they do have registration requirements, it is not accurate to claim there are no requirements for registration; thus, this factor does not represent a disadvantage. Being aware of these financial commitments is crucial for anyone considering forming a private limited company.