Which of the following is an advantage of a private limited company?

• A. It has unlimited liability
• B. It can pay less tax
• C. It has limited liability
• D. It cannot raise capital

Answer: (C)

Limited liability is the main advantage. A private limited company is a separate legal entity, so shareholders’ losses are limited to the amount they have invested in shares. If the business fails, personal wealth isn’t at risk, which makes investing and financing easier because people are willing to provide funds knowing their personal assets aren’t exposed. The other statements don’t fit: unlimited liability would put personal assets at risk, which a private limited company does not have; paying less tax is not automatically guaranteed by this form; and a private limited company can raise capital by selling shares to private investors (though not on the public market), so “cannot raise capital” isn’t true.