Private Limited Companies
A guide to Private Limited Companies
The most popular type of incorporated companies in Zimbabwe is the private limited company. These days you can even register one online using a company registration service such as the one provided by Register Your Company. If you prefer to speak with a human, you can call one of our professional company registration experts who will walk you step-by-step through the simple process. Call us on Telephone:- +263 (0242) 753 168 or on Mobile:- +263 786 507 158 or email us on email@example.com.
To register a private limited company you do not need a minimum amount of capital, neither do you need to have hundreds of employees working for you. In fact many of the thousands of private limited companies registered in Zimbabwe are very small and are generally regarded as small to medium enterprises.
A private limited company an an ideal setup for entrepreneurs to protect themselves against trading losses, especially when working within an unstable and ever-changing economic climate. What this means for entrepreneurs is that their company will be responsible for its own debts and trading losses rather than the individual(s). The individual(s) person’s own assets will remain protected from business creditors, and their liability will be limited to their share amount.
In other words, operating as an unregistered sole trader will mean you are held personally liable for your business borrowings to your creditors if your business fails. This can prove to be very costly indeed if your business should fail!
If you chose instead to set up a private limited company, your company can then offset its trading losses against its other income, but not against your income as an individual. Your personal assets will remain protected.
Being a private limited company will also mean that your business profits are liable for income tax at the single rate, currently 24.5%. However, this is a far better rate than what is paid by an individual operating as a sole trader.
Is it only for SME’s?
There are obvious benefits for the sole trader or small and medium sized business to register this type of company, but that doesn’t mean that large firms couldn’t benefit too. Incorporation is the only way to protect your company name against someone else registering it. A great way to beat your competition is to snap up all the different variants of your company name to prevent anyone else from trading under the same of a similar name to your own.
Once registered, your company does not actually need to start trading until you are ready. Your private limited company can remain dormant for as long as you want it to, although you will still need to submit companies registry annual returns for the company.
As a private limited company, you are not allowed to sell shares to the public, but should your business grow to a level where you would want to sell shares, or you needed to access significant funding through investment to allow it to grow, then you have the option to convert your business into a Public Limited Company. This will enable you to offer shares to the public, and also give you the choice to have shares traded on a Stock Exchange e.g. the Zimbabwe Stock Exchange.
Advantages of a Private Limited Company
- A legal entity in its own right, a private limited company enables you to keep your company finances separate from your own personal finances.
- Personal Liability Protection: Your personal assets are not put at risk should your business fail. Your liability as a shareholder is limited to the amount unpaid of the shares held by you.
- Registering a company will add to your business creditability. This makes it easier to secure finance for your business with less personal risk.
- Boosting customer confidence: You business will be perceived as more professional and reputable, so building trust with your customers and commercial partners.
- Indefinite lifespan: Private limited companies do not cease trading if a director or shareholder dies.
- Lower rate of tax liabilities: As a private limited company you can gain tax benefits.
- Low cost way of protecting a business name.
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Private Limited Company Frequently Asked Questions
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What are the requirements to register a PLC?
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