Paper 1 · forms of business
The main benefit of forming a private limited company rather than a partnership is that
Athe company can offer its shares for sale to the general public
Bthe company pays no tax on the profit it makes
Cno formal documents are needed to set the company up
Dshareholders' liability is limited to the amount they invested
Explanation: Incorporation gives the business a legal identity separate from its owners, so a shareholder can lose the money put into the shares but no more. Selling shares to the public is reserved for a public limited company, incorporation requires formal documents to be lodged, and a company still pays tax on its profits.
Derived from ZIMSEC Business Enterprise Skills Paper 1, Specimen Paper (edition A), Q2