A private limited company enjoys the following advantages:
1. Ease of formation:
A private company can be formed by two persons only. It can start its business immediately after incorporation and is not required to wait for the certificate of commencement of business.
2. Greater flexibility:
A private company is required to perform lesser legal formalities as compared to a public company. It enjoys special exemptions and privileges under the company law. Therefore, there is greater elasticity of operations in a private company.
3. Quick decisions:
In a private company there are a lesser number of people to be consulted. Family members, relatives and close friends form a private company. They can take prompt decisions.
A private company is not required to publish its accounts or file several documents. Therefore, it is in a better position than a public company to maintain business secrets.
5. Continuity of policy:
The same persons continue to manage the affairs of a private company. Relations between them are close and continuity of policy can be maintained.
6. Limited liability:
The liability of members in a private company is limited.
7. Personal touch:
There is greater personal touch with employees and customers in a private company. There is also greater incentive to work hard and take initiative in the management of business due to little separation between ownership and management.