Which statement is NOT an advantage of a private limited company?

Which statement is NOT an advantage of a private limited company?

• A. High setup costs
• B. Limited liability
• C. Control cannot be lost to outsiders
• D. Tax advantages

Answer: (A)

Starting point: private limited companies offer benefits like protecting owners through limited liability and keeping control within a chosen group, with some potential tax planning advantages depending on the country. The statement that isn’t an advantage is the idea of high setup costs. Setting up a private limited company often involves more upfront expenses—legal fees, registration, and compliance costs—which are drawbacks, not benefits. By contrast, limited liability protects owners’ personal assets, and the ability to restrict share transfers helps keep control with the existing owners. Tax advantages can also be a benefit, depending on the jurisdiction. So the costly start-up is the item that isn’t an advantage.

Starting point: private limited companies offer benefits like protecting owners through limited liability and keeping control within a chosen group, with some potential tax planning advantages depending on the country.

The statement that isn’t an advantage is the idea of high setup costs. Setting up a private limited company often involves more upfront expenses—legal fees, registration, and compliance costs—which are drawbacks, not benefits. By contrast, limited liability protects owners’ personal assets, and the ability to restrict share transfers helps keep control with the existing owners. Tax advantages can also be a benefit, depending on the jurisdiction. So the costly start-up is the item that isn’t an advantage.