Difference Between Inc and Ltd

During the institution of a business group, the first decision is to choose between the different kinds of business models. The two most common models are Ltd and Inc.

Inc vs Ltd

The difference between Inc and Ltd is that an Incorporation is the formation of a new business entity in which the legal department is separated from its owners and the profit and loss of the company is not passed to the members while a Limited company is that in which the ownership is limited to a few individuals or a group of individuals who have invested in the company.

Inc vs Itd

In a limited company, powers lie in the hands of the owners who are either the investor of the company or the guarantor of the company.


Comparison Table

Parameter of ComparisonIncLtd
Basic definitionInc is an entity that is kept separate from its owners.Ltd is a company in which the powers or the liability of the company are vested with the people investing in it or with the people who have taken a guarantee of it.
ManagementInc company is regulated or run by the board of directors and the companies are required to appoint officers as per the laws established by the government.Ltd company has to appoint officers at various levels and is run by at least one director.
Taxation systemThe company pays the corporation tax while its profit and loss are transferred to the company and does not reach its members.The Ltd company has a single taxation system, therefore, the profit and loss are passed to its members.
Ownership of the companyAn Inc company is held by the stockholders.Members of the company can either be public or from a defined group.
Suitable forInc designation is more suited to large businesses.Ltd designation is more suited for small business organizations.


What is Inc

Inc is an abbreviation for Incorporated. Inc is a company in which the entity is separated from the owners, it is an entity that does its business on the legal guidelines.

The company pays the corporation tax. All of its profits and losses remain within the company and as not transferred to its members.

In its shares, an Inc company does not pose any restrictions on its members, however, in an Inc company there are some limits on the liabilities of an individual.


What is Ltd?

Ltd is the abbreviation used for limited. A company in which the power lies within the hands of a few individuals or a group of individuals is known as a limited company, that is, the power of the company is either in the hands of investors or guarantors.

A limited company has a single taxation system. The profits and losses of the company are directly transferred to its members.

When it comes to shares, a limited company poses some restrictions on its shareholders. It has a separate legal body for its shareholders. Officers and directors are answerable in case of debts.

A Ltd company can either be a public limited company or a private limited company depending on the type of its members.


Main Differences Between Inc and Ltd

  1. The incorporated designation is better for large businesses while the limited designation is more suited to the small business groups.
  2. The legal entity is separated from shareholders in both the Inc and Ltd company.
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