Ltd. Definition & Meaning

(Ltd.) is an abbreviation of a limited company. It is usually seen as a suffix connected to a company’s business name, indicating that it is a private limited company. Though most of the known Ltd. companies are private, there are also public limited companies of PLC. Ltd. are composed of two or more members who are also called owners or shareholders.

They are different from directors who are the employees directly involved in the administration and management of the company.

It is a legal structure of a business organization where the assets and income of the shareholders are separated from the company’s assets and income. Thus, Ltd. separates the owners from the business itself or it can be described as a company limited by shares.

In corporate law, this is known as limited liability. In a limited company, the shareholders’ liability is only within the capital they have invested and will not include their personal assets. Therefore, investors have the advantage in this kind of set-up because they are more protected financially from the possible company’s failure that might happen.

In other words, the assets of the shareholders are off-limits in case the company will need to pay future liabilities and other financial obligations. The profits gained from the company’s business operations or dividends could be distributed immediately to the investors once the taxes were already paid. They may also choose to reinvest them for more income later on or they may transfer it to other shareholders.

Key Advantages of Ltd Limited Company

  • Liabilities are limited to the capital or money invested and responsibilities are also distributed and will not be shouldered by one. Personal assets are protected from any future financial distress when the company becomes insolvent.
  • Private limited companies have a greater advantage in the payment of taxes compared to sole proprietorships and corporations. While the dividends are distributed based on the profit, taxes are computed, which means each owner will only have to pay a smaller amount.
  • The limited company can still operate and will not be stopped even if the shareholders will sell or transfer their shares to others. This assures job security and consistent income. It will not only secure employment but also contributes to economic stability.