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The chief advantage of a limited company is that the liability of the people who own or control it is limited, due to the fact that, legally, the limited company is a separate entity. This means that the owners are not personally liable for the debts of the company, and their liability is limited to the amount that they invested in the company. (An exception to this is where they have acted as a guarantor for the company.)
The advantages of forming a limited company are:
There are, however, disadvantages of forming a limited company:
These are some of the key factors that should be taken into account when you are deciding whether a shareholders' agreement is the correct document for you and your business.