Limited vs Ltd
“Ltd” is a term that we very frequently see behind the name of a company. The word Ltd is a shortened form for ‘limited liability’. There is quite a lot of confusion among many as to whether Ltd is same or different to what is meant by limited liability. In this article, we aim to clarify this misunderstanding by clearly explaining what is meant by the term limited liability and explaining how shorten forms are generally used to indicate various business structures.
Limited
Limited liability is when the liability of the investors or owners of a company is limited to the amount of money that they have contributed/invested in the business. The owners of a company that is registered as a limited liability company will be safer in the event that the firm faces bankruptcy. The meaning ‘limited liability’ is that the owner’s losses are limited to their specific share of contributions and cannot be held responsible for losses beyond their share of contribution. The most popular and well known form of a limited liability company is a corporation.
Owners in a corporation are shareholders, and the liability of shareholders are only limited to the amount of funds that they invested. If the company goes bankrupt, the shareholders will lose their entire investment in the firm but are usually not held liable for losses beyond their contribution. Alongside the advantages, there are also disadvantages of a limited liability company. Managers of a limited liability company are protected against personal liability (their personal assets cannot be seized to pay for losses), which may result in them acting in a reckless manner as they are protected against risk of loss.
Ltd
The term “Ltd” frequently follows a company name and provides an indication of the kind of business structure. Ltd has the same meaning as limited liability and is the shortened form for the term Limited liability. Therefore, any company that has the term Ltd is a company that has limited liability. There are also different forms of limited liability structures that have endings such as Ltd (companies that are privately held by a few family members that have limited liability) PLC (public company with limited liability) LLP (limited liability partnership) and LLC (limited liability company).
Limited vs Ltd
In conclusion, the term “Ltd” is just a shorten form for “limited liability” and these two terms mean the same thing. Even with the different names such as LLC, PLC, LLP, Ltd., it must be kept in mind that whether a private company, partnership, or public company, the liability is limited to the amount of the investment made.
Summary:
Difference Between Limited and Ltd
• “Ltd” is a term that we very frequently see behind the name of a company. The word Ltd is a shortened form for ‘limited liability’ and the two terms Limited and Ltd mean the same thing.
• Limited liability is when the liability of the investors or owners of a company is limited to the amount of money that they have contributed/invested in the business.
• Owners in a LLC are shareholders, and the liability of shareholders are only limited to the amount of funds that they invested. If the company goes bankrupt, the shareholders will lose their entire investment in the firm but are usually not held liable for losses beyond their contribution.