Which of the following is not an advantage of a limited company?

A limited company has several advantages, including separate legal personality, no restrictions on size, and limited liability. However, compliance costs represent a disadvantage rather than an advantage of operating as a limited company.

Separate legal personality means that the company is recognized as a distinct legal entity, separate from its owners. This allows the company to own property, enter into contracts, and be sued or sue in its own name. This feature is crucial for protecting the personal assets of the owners and provides a level of security that is not available in sole proprietorships or partnerships.

The lack of restrictions on size refers to the capacity of a limited company to grow and scale without being limited by the number of shareholders or the amount of capital it can raise. This flexibility allows the company to evolve and expand operations more freely compared to other business structures.

Limited liability is a significant advantage because it protects the personal assets of shareholders. In the event that the company faces financial difficulties or legal actions, shareholders are only liable for the company’s debts up to the amount they have invested. This reduces the financial risk for individuals investing in the company.

In contrast, compliance costs arise from the legal obligations that limited companies must comply with, such as detailed record-keeping, filing annual returns, and