Difference Between LLC and Ltd

LLC vs Ltd
 

The terms Ltd and LLC are frequently seen with company names, and are given to different types of companies depending on the business structure to which they belong. The terms Ltd and LLC both are used for companies that have limited liability, which means their liability is limited to the amount of funds that were invested or contributed, and they do not have to pay for other losses by disposing personal assets. Ltd companies and LLCs are similar to one another and the following article clearly explains each term and highlights how they are similar and different.

Ltd

Ltd is generally used for a company that has limited liability. Further to this, companies with Ltd in their title are privately held companies. A privately held company is owned by a few family members of close individuals and shares are held among those individuals and cannot be offered to the public. Shareholders of the firm will be responsible only up to the amount that they invested in the firm and cannot be held responsible for any losses beyond that. Shareholder’s personal assets and funds cannot be used in the event of insolvency and is, therefore, a safer investment. The company will act as a separate legal entity and will pay tax separately from its shareholders. Ltd companies are formed with an issued share capital and an authorized share capital. Shares that are not issued can be issued later on; however, approval of all shareholders is required for this. Such approval is also required when shares held by shareholders are being sold.

LLC

A LLC is a limited liability company, and since it has characteristics of both a partnership and corporation, the owners of an LLC are called members and not shareholders. Since it is not a corporation, an LLC is more flexible than a public limited company. The major benefit is that the liabilities of members are limited to the amount of their investment. Another advantage is that LLC are taxed based on the partnership model, which means that members will have to pay taxes once; not separately for the company and individual taxes. In a LLC stock cannot be sold as the members please, and approvals of other members are required for this. In the event of the death of a member, the LLC will have to be dissolved. In order for an LLC to be set up, articles of organization must be filed according to the specific requirements of each state.

LLC vs Ltd

The terms Ltd and LLC are both used for companies that have limited liability. The two types of limited liability firms are set up by a smaller number of individuals, and in both company structures approval of all shareholders/members are required to sell shares. They are, however, quite different in the way that they are taxed; Ltd companies are taxed as a separate entity, whereas a LLC is taxed based on a partnership model in which one tax is paid, instead of paying corporate and individual tax separately.

Summary:

Difference Between LLC and Ltd

• Both the terms Ltd and LLC are used for companies that have limited liability, which means their liability is limited to the amount of funds that were invested or contributed, and they do not have to pay for other losses by disposing personal assets.

• Ltd is generally used for a company that has limited liability, and companies with Ltd in their title are privately held companies. A privately held company is owned by a few family members of close individuals and shares are held among those individuals and cannot be offered to the public.

• A LLC is a limited liability company, and since it has characteristics of both a partnership and corporation, the owners of an LLC are called members and not shareholders.

• Both are set up by a smaller number of individuals, and in both company structures approval of all shareholders/members are required to sell shares.

• While Ltd Company is taxed as a separate entity, LLC is taxed based on a partnership model, in which, one tax is paid instead of paying corporate and individual tax separately.