LTD vs LLC: Difference and Comparison

It is easy to get wired up about searching for the differences between LTD and LLC, and with the similarities in their names, one ends up even more bewildered.

However, LTD and LLC are as much different as their name sounds similar.

Key Takeaways

  1. LTD (Limited) is a business structure commonly used in the United Kingdom and other countries, where ownership is divided into shares, and shareholders have limited liability.
  2. LLC (Limited Liability Company) is a business structure in the United States offering limited liability protection to its members and combining aspects of corporations and partnerships.
  3. LTD and LLCs provide limited liability protection to their owners, but their formation, governance, and tax requirements differ depending on the jurisdiction.

LTD vs LLC

LTD means Limited Partnership and is when an organization has certain shareholders, called partners, and the laws are regulated under the state. LLC stands for Limited Liability Company and is an organization where the shareholders are members of the company and are protected from liabilities and debt.

LTD vs LLC 1
/10

Business Quiz

Test your knowledge about topics related to business

1 / 10

The six Ps are collectively known as the Marketing Mix. They are ways in which organisations differentiate themselves. They include

2 / 10

__________ scale firms enjoy economies of scale.

3 / 10

When at least 51% shares are in the hands of government, it is called as __________.

4 / 10

When an existing company offers its shares for sale to the existing shareholders, it is known as ___________.

5 / 10

Economic activities are related to ___________.

6 / 10

Which of the following is not an economic activity?

7 / 10

Office is a place where ___________.

8 / 10

Individual Ownership is called as?

9 / 10

Overall and strategic planning is done by the ___________.

10 / 10

Who is the servant of the firm with a share in the profits?

Your score is

0%

LTD is an abbreviation of Limited denoting limited partnership, whereas LLC stands for Limited liability Company that incorporates the benefits of both partnerships and companies.

Another key difference is that the shareholders of an LTD partnership are liable to pay the company’s debt limited to what they have invested. In contrast, in LLC, protection from liabilities depends on the applicable jurisdiction.

Besides, in an LTD, there are limits to the number of shareholders who can invest, whereas, in an LLC, a significant number of members can hold shares in the company. In LTDs, mostly only co-owners are given power.


 

Comparison Table

Parameter of ComparisonLTDLLC
Full form and structureLimited denoting limited partnership, having general and limited partnersLimited liability Company protects shareholders from debts and liabilities
ShareholdersOnly co-owners have sharesIt can be one or many
Shareholders are calledPartners in the company, mostly co-foundersMembers of the company need not be founders
Liability protectionPartners are liable to company debt limited to their investmentIt depends on the state laws and the applicable jurisdiction
TaxationThe company pays tax as a separate entity from the gains and profits madeThe company pays no tax; members are taxed from their invoice

 

What is LTD?

LTD stands for Limited or limited partnership, and its laws are regulated under state laws. Shareholders of LTD are called partners since there are certain limitations to who can be a shareholder.

Limited partnerships have two kinds of partners; one is a limited partner, and the other is a general partner. A general partner makes all the business decisions; the limited partner is a silent investor.

In a limited partnership, the shareholder is liable to a company’s debt only as much as he invests and is protected from losing extra on the company’s insolvency. However, when a limited partner makes company decisions, he risks losing more.

LTD is an extension used at the end of company names to denote its type of company and the laws that regulate its structure. LTD is, however, never singularly used on its own.

LTD companies pay taxes from their profits as individual entities separate from their owners. The shareholders do not pay any separate taxes. These shareholder benefits are received only by a few people, essentially given only to the co-founders.

ltd
 

What is LLC?

LLC stands for Limited Liability Company and provides some or all the protection from the liabilities of dept to its members. LLCs can attract investors by providing shares since they are eligible to have several shareholders.

A shareholder of an LLC is known as a member, and unlike LTD, all these members enjoy equal protection from the debts and liabilities of the company. An LLC member can also participate in the company’s decision-making without risking assets.

LLC companies have several tax options, such as a sole proprietor, a partnership, an S corporation or a C corporation. The company, however, do not pay taxes as a separate entity.

LLCs are regulated by state laws and are mostly suitable for smaller companies. Another type of LLC is called the Series LLC, which enables the investor to protect their primary assets by designating them to smaller entities.

However, the laws of forming an LLC vary from state to state and require detailed documentation of the organization and its various laws to be submitted to the state.

This article includes rights, powers, duties, liabilities, names and addresses of the LLC’s members, the name of the LLC’s registered agent, etc.

llc

Main Differences Between LTD and LLC

  1. The main difference between the LTD and LLC is that LTDs pay taxes as a separate entity from its owners, whereas LLCs of options to choose from, such as a sole proprietor, a partnership, an S corporation or a C corporation.
  2. Another key difference is that the shareholders of an LTD partnership are liable to pay the company’s debt limited to what they have invested, whereas, in LLC, all members have protection from debt and liabilities.
  3. Shareholders of LTD are called partners since there are certain limitations to who can be a shareholder. In contrast, LLCs can attract investors by providing shares since they are eligible to have several shareholders.
  4. LTD is an abbreviation of Limited or limited partnership; on the other hand, LLC stands for Limited Liability Company that incorporates the benefits of both partnerships and companies.
  5. In limited partnerships, when a limited partner involves in company decisions making, he risks losing more. In contrast, an LLC member can also participate in the company’s decision-making without risking assets.
Difference Between X and Y 2023 04 09T082234.848

Last Updated : 11 June, 2023

dot 1
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️

Leave a Comment

Your email address will not be published. Required fields are marked *

Want to save this article for later? Click the heart in the bottom right corner to save to your own articles box!