1. A limited liability company means that shareholders are liable to the company to the extent of their capital contribution, and the company is liable to its debts with all its assets. A company limited by shares means that all its capital is divided into equal shares, and shareholders are liable to the company to the extent of their shares, and the company is liable to its debts with all its assets.
2. Legal basis: Article 3 of People's Republic of China (PRC) Company Law.
The company is an enterprise legal person, with independent legal person property and legal person property rights. The company is liable for its debts with all its property. Shareholders of a limited liability company shall be liable to the company to the extent of their subscribed capital contribution; Shareholders of a joint stock limited company shall be liable to the company to the extent of the shares subscribed by them.
What's the difference between a sole proprietorship and a limited company?
The difference between a sole proprietorship enterprise and a limited company;
1. Different investors: the investment subject of a limited liability company can be a natural person or a legal person; A sole proprietorship enterprise has only one investor, namely a natural person. The responsibility shall be borne by the sole proprietorship enterprise.
2. Different legal forms: a limited liability company is a legal civil subject with legal personality, but a sole proprietorship enterprise is not.
3. Different conditions for establishment: the capital contribution of a limited company shall not be less than 30% of the registered cost, while the sole proprietorship enterprise does not make any mandatory provisions on capital contribution.
4. Different tax regulations: limited liability companies need to pay enterprise income tax, and sole proprietorship enterprises do not need to pay individual income tax.
5. Investors bear different responsibilities: the shareholders of a limited liability company bear "limited liability" to the extent of their subscribed capital contribution, while the investors of a sole proprietorship enterprise bear unlimited liability to the company with their personal assets.
6. Different financial and accounting requirements: Limited companies should prepare financial and accounting reports at the end of each year and audit them by accounting firms. A sole proprietorship enterprise only needs to set up accounting books for accounting according to law, and does not need to be audited by an accounting firm. .