What Is a Limited Company?

Are you looking to register a new company but aren’t quite sure which company structure is best suited to your business? Here’s a quick-read summary of what you need to know.
A limited company is a company that has been registered (incorporated) with Companies House, the official company registrar in the UK.

“Limited” accurately describes the nature of a company once incorporated as it limits the liability of its officers and members to only the amount they invested into the company which protects each company officer from incurring any personal debts due to the debts of the business.

In terms of limited company structures, there are three distinct types:

  1. Private Companies Limited by Shares (Ltd): This is by far the most popular of the limited companies structures. It is typically the best structure for private, for-profit companies. These companies are structured through shares; very small companies may issue one single share that is owned by the company’s sole Director or proprietor.

Private Companies Limited by Guarantee

2. Private Companies Limited by Guarantee (LBG): This structure is best suited to not-for-profit organizations such as community associations, membership clubs, and charities where all profits are reinvested back into the company. This “limited” company structure means that the company’s Guarantors or Members’ liability is limited to a certain guaranteed amount.

3. Public Limited Companies: As the name suggests these are public companies. While their structure is similar to private companies limited by shares, public limited companies are financially required to have more skin in the game, with a minimum of £50,000 allotted in share capital, a proportion of which must be paid in advance of the company’s formation. Public limited companies have the option to raise capital by selling their shares to the general public on the stock market.

Looking for more information about company structures and which may be the best fit for your business? Our expert company formation agents are always standing by and ready to help! Call us at +44 (0)203 8932 121 or email info@121companyformation.co.uk

To read more about some of the advantages of registering a limited company, check out our blog article 5 Key Reasons You Should Incorporate Your Company.

About 121 Company Formation

121 Company Formation is one of the UK’s leading online company formation agents. We have helped over 50,000 entrepreneurs register a company in the UK. We offer the most comprehensive range of services including company formation packages that start at just £15.95, administrative, accounting, and bookkeeping services to support you and your business before, during, and after the incorporation process.

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