Difference Between Ltd and LLC

Key difference: Both LLC and Ltd Company issue shared that are privately held and privately traded. In a limited company, the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Whereas, the Limited Liability Company is a type of legal structure that provides the limited liability similar to a corporation and the tax efficiencies and operational flexibility of a partnership.

It may be said that the Ltd is the company format in the UK, Republic of Ireland, and the Commonwealth countries, whereas the LLC is probably the approximate equivalent in the US. Both LLC and Ltd Company issue shared that are privately held and privately traded. However, there are a number of small differences between an LLC and an Ltd Company.

In a limited company, the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Whereas, the Limited Liability Company is a type of legal structure that provides the limited liability similar to a corporation and the tax efficiencies and operational flexibility of a partnership.

A limited company (Ltd) is also known as a limited company limited by shares. It is further divided into public companies and private companies. Types of a limited company include:

 
  • Private company limited by guarantee – A company that does not have share capital, but is guaranteed by its members who agree to pay a fixed amount in the event of the company's liquidation. Mainly charitable or non-profit companies.
  • Private company limited by shares – Has shareholders with limited liability and its shares may not be offered to the general public.
  • Public limited company – Public limited companies can be publicly traded on a stock exchange, similar to a corporation.

An LLC or a limited liability company is a legal form of company that provides limited liability to its owners in majority of United States jurisdictions. The can be for profit or not for profit. Basically, LLC combines certain characteristics of both a corporation and a partnership. However, an LLC is a type of unincorporated association, not a corporation. It is often more flexible than a corporation, and it is more suited for companies with a single owner.

A comparison of an Ltd and an LLC:

 

Ltd

LLC

Stands for

Limited Company

Limited Liability Company

What is it

Ltd is a company or business where the liability of the company is limited to what the members have invested in or guaranteed.

LLC is a type of legal structure that provides the limited liability similar to a corporation and the tax efficiencies and operational flexibility of a partnership.

Suitable for

Big businesses or corporations.

Small businesses.

Ownership

Members; however can also be public in a public limited company.

Members

Management Level

Must have formally appointed company officers at all times. At least one Director.

Only Members and managing members of the company.

Members needed to set up

Not less than two and not more than fifty members.

1 or more

Taxation

Single taxation (Profit or loss are passed directly to members).

Single taxation (Profit or loss are passed directly to members).

Legal entity

Separate legal entity from shareholders.

Separate entity from shareholders, but members may be held liable for non fiscal obligations.

Regulation of entity name

Ltd or Ltd. or Pvt. Ltd. (private limited) or PLC (public limited company) or Inc. (Incorporated).

Differs with each state but mostly LLC or L.L.C. is added.

Continuity of life

Indefinite term. It continues to exist even if all its members die or desert it.

Indefinite term

Liability

Limited

Limited

Paperwork and records

Relatively less cumbersome to organize and operate it as it has been exempted from many regulations and restrictions.

Not much paperwork is required. Annual state reports are required to be filed with the appropriate fee; can file by mail but most states allow or mandate online filing.

Image Courtesy: thewandcompany.com, jalopnik.com

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