Disadvantages of Private Limited Company. Their personal assets, the salary earned as an employee of the company, real estate properties, etc. Private Limited Companies enjoy the advantage to carry out legal proceedings and to bring a suit in the court of law. Advantages and Disadvantages of Setting up a Private Limited Liability Company. Some disadvantages include complex accounts, public records and accountant fees. Failure to fulfil these duties can lead to a fine or, in severe cases, a prison sentence. Disadvantages of a Private Limited Company: One of the main disadvantages of a private limited company is that it restricts the transfer ability of shares by its articles. As the director of a Private Limited Company, you will also have a number of legal duties, including an obligation to safeguard the company’s assets. Just like any other type of person, a company being an independent legal entity, can initiate legal action against any other person and similarly can be sued in the court of law. Hence, registering a private limited company involves a process and costs which are not applicable to an unregistered entity like proprietorship. Advantages and disadvantages of Private Limited Company Advantages of a Private Limited Company Separate Legal Entity: This makes the company a legal person and by that you can avail its benefits like owning property in the name of the company or can even incur debts. In a private limited company the number of members in any case cannot exceed 200 . The advantages include tax efficiency, separate entity and professional status. Therefore, the financial and managerial resources of a private company are comparatively limited. Private limited company is an ideal business entity for a majority of medium and large sized business, as it offers a host of advantages from liability protection to easy transferability. However, operating as a private limited company is not ideal for all businesses, especially micro or small enterprises. There is more paperwork and time associated with running a limited business than when operating as a sole trader, which can be off-putting for some. By … In case the private limited company has debt and losses, the only liability by the shareholders is only up to the amount they individually invested. A complete breakdown of limited company advantages and disadvantages. Disadvantages of a private limited company There are some disadvantages of a private limited company of which you should be aware. Its credit standing is lower than that of a public company. A private company suffers from the following limitations: 1. 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