Final answer:
A limited company structure protects shareholders through limited liability and enhances the ability to raise capital for growth. Unlike a sole proprietorship or partnership, it offers an unlimited life for the business and allows for easier ownership transfer, with the business being a separate legal entity.
Step-by-step explanation:
Operating through a limited company structure offers several advantages over being a sole trader or in a partnership. One of the key benefits is the aspect of limited liability, which protects the personal assets of the shareholders; they are only liable up to the amount they have invested in the corporation. This is in contrast to sole proprietorship, where personal assets can be at risk in the event of business failure.
Additionally, a limited company structure enhances the ability to raise capital. It can do this more effectively than sole proprietorships or partnerships, by selling shares or issuing bonds. Moreover, the corporate structure allows for an unlimited life of the business, irrespective of changes in ownership or management, unlike partnerships that may dissolve upon the exit or death of a partner.
Corporations also enjoy the benefit of being a separate legal entity capable of suing, being sued, and entering into contracts. They can hire professionals, have easier means for transferring ownership, and potentially have greater market recognition and professional reputation. While sole proprietorships and partnerships have their merits, such as less regulation and simplicity, the structure of a limited company provides significant protection and opportunities for growth.