Learning Center

LLC vs. Public Limited Company

Recognizing the variations between LLC and PLC arrangements is essential when starting a business. For example, LLC is an abbreviation for "limited liability company," whereas PLC is an abbreviation for "public limited company."

A limited liability company (LLC) is a privately owned company, whereas a public limited company (PLC) is publically listed on the stock exchange. Each jurisdiction has its own set of regulations and prohibitions for LLCs and PLCs, but not every trade association is accessible in every state.

An LLC is a type of corporate company created under state legislation. Highly specialized LLCs, such as a professional limited liability company (PLLC), are permitted in several states. Since an LLC is unregulated, its owners (referred to as "members") might be:

    • Individuals.
    • Other limited liability companies.
    • Corporations.

A public limited corporation (PLC), on the other hand, can sell shares to the general public.


What is the Purpose of LLCs?

An LLC is a business entity that combines both a partnership and a corporation. Shareholders of LLCs benefit from a dynamic governance framework comparable to that of partnerships. Unlike in a partnership, shareholders are not subject to liability if:

    • The LLC is being sued
    • It is unable to cover its current liabilities
    • It declares bankruptcy

Members are only accountable for the amount they individually contribute to the firm.

There are no restrictions on who can join an LLC. Indeed, it might be possessed by:

    • A single person
    • Multiple members
    • Other commercial enterprises

However, several states limit the types of organizations that can incorporate LLCs. Certain professions, for example, are prohibited from forming an LLC. To generalize, the key advantages of forming an LLC are as follows:

    • Pass-through Taxation
    • Limited liability protection in the manner of a corporation


What is the Purpose of PLCs?

In the United Kingdom, a public limited company (PLC) is a type of general business. PLC is the counterpart of a publicly listed firm in the United States that bears the Inc. or corporation classification. Including the PLC acronym following a business's name is required, and it informs investors and anybody engaging with the firm that it is a publicly-traded business.

A public limited company (PLC) is a limited liability company (LLC) wherein ordinary people can purchase stocks.

A PLC's shares can be acquired by anyone, officially on the stock exchange, at an initial offering, or informally.

PLC is often used by firms in the United Kingdom and other Commonwealth nations; however, businesses in the United States and other areas prefer "Ltd" and "Inc."

The mandatory use of the PLC acronym after a business's name aids in immediately indicating to investors and other interested parties that the firm is a publicly listed corporation with reasonably extensive activities.


Differences between LLCs and PLCs

  • Formation 

A limited liability company (LLC) is established with a minimum of one owner and by submitting articles of incorporation to regulate the LLC. 

A PLC, on the other hand, is established when two or more executives or stakeholders agree to form a PLC, file a memorandum and articles of association to regulate the PLC, register the business as a PLC, and offer equity securities to the public.

Based on the state, a PLC can be registered at a Companies House, Registrar, or Businesses Registration Office.

  • Administration

An LLC can be member-managed, in which all members participate in the administration and maintenance of the LLC, or a supervisor, in which only specific members have authority.  

On the other hand, PLC managerial decisions are decided by a PLC administrator or the PLC board of directors.

  • Liability 

LLC members are held accountable for the LLC's liabilities, but each LLC member is liable for their wrongdoings up to the amount invested in the firm.

PLC directors and shareholders are not personally liable for the PLC's debts, but also they are privately held accountable for any personal loans made to the business.

  • Taxation 

LLC representatives are taxable just once and must prepare a single income tax return for their income.

Conversely, LLC members who elect to be classified as C corporations will be taxed twice: once on the business's revenue then again on the LLC member's earnings.

On the other hand, PLC directors and/or shareholders are taxed twice. First, based on their director's profits, PLC shareholders submit tax filings and Class 1 National Insurance contributions.

  • Termination 

An LLC operating agreement will provide a method to terminate the LLC in most cases. Still, if the contract is silent, many jurisdictions have default procedures that will dissolve the LLC, including a unanimous decision to dissolve by its members. 

A merger or acquisition can dissolve PLCs.

  • Shares 

Since LLCs are not incorporated, shareholders cannot offer equity. However, the capacity to provide stocks is a corporate right controlled by the Securities Exchange Act. 

Because PLCs are incorporated, they can offer stocks to anybody outside the business.


Similarities between LLCs and PLCs

These two corporate arrangements are likewise comparable in various ways. It would be best if you were both a PLC and an LLC to be a PLC. Both of these businesses can shield the owners' financial property from being harmed. 

This business structure allows you to separate your personal and business possessions. Taxation is similarly comparable since gains and losses will be passed straight on to the company's owners rather than having corporation taxes filed independently. When compared to a regular company, these businesses are easier to manage.


Notice: The details provided within it do not constitute legal advice. The knowledge of this article is for general reference purposes only. Your access to or reliance upon this information does not create any relationship involving an attorney or client. You should always head out and consult an attorney for specific legal advice regarding your situation.