Which of the following is a characteristic that distinguishes a private limited company (Ltd) from a sole trader?

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Question

Which of the following is a characteristic that distinguishes a private limited company (Ltd) from a sole trader?

Accepted Answer

The business has a separate legal identity from its owners — A private limited company has a separate legal identity, meaning the company itself can own assets and be held liable — distinct from the owners personally. Sole traders do not have this separate legal identity and face unlimited liability. Option B describes a public limited company (plc), not a private limited company. Option D is a characteristic of a sole trader, not a limited company.

Answer

The owner receives all profits without sharing them

Answer

The owner has unlimited liability for business debts

Answer

The business can sell shares to the general public on a stock exchange

Answer

The business has a separate legal identity from its owners

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