What is a Company Limited by Guarantee?
A company limited by guarantee is a business structure used by charities and not-for-profits that is subject to both company and charity law. Under this model, the company directors serve as the charity trustees. A company limited by guarantee doesn’t have shares. But its members are broadly equivalent to shareholders in a private limited company by shares.
1. Forming a Company Limited by Guarantee – BENEFITS
By forming a company limited by guarantee, a charity’s trustees protect themselves from personal liability should the charity get into financial trouble.
A company limited by guarantee is a separate legal entity. That means, it’s responsible in its own right for everything it does, and the company’s finances are separate from the finances of the trustees. This gives more protection to the trustees if the company builds up debts that it can’t repay.
The word ‘guarantee’ relates to an agreement by each member to pay a nominal amount to the company if it goes insolvent. Normally, this is just £1.
2. Forming a Company Limited by Guarantee – SOMETHING TO REMEMBER
Because a company limited by guarantee is regulated by both Companies House and the Charity Commission, there can be a fair amount of paperwork to stay on top of.
It’s important that you or your company secretary file everything at Companies House on time and in full, or you could find yourself paying off some annoying fines.
3. How to Register a Company Limited by Guarantee
To set up a company limited by guarantee, you’ll need to register your company with Companies House. To do this, you should complete an IN01 form. Companies House will want to know:
- what your company is called
- the names of the company directors/trustees
- the business address (to protect your privacy, you can use our Central London location as your publicly registered business address)
Make sure to pick a company name that hasn’t been used before. One way is to include the location of your company in the name.
You’ll also need to submit a memorandum and articles of association. These are legal statements signed by the trustees and members of the company that spell out how it will be run.
Once you have all the information you need, you can register your company limited by guarantee online with Companies House. With our company formation packages, this is quick and simple. There are four packages to choose from:
- E-Formation (£9.99): perfect if you want to secure a company name and don’t need any official printed documents.
- Essential (£19.99): offers you complete confidence that you’re starting a company limited by guarantee with the rules and regulations covered.
- Entrepreneur (£59.99): kick-start your next big venture with official compliance and additional documents of incorporation.
- Super (£89.99): the complete secretarial and compliance package to establish your company on a robust footing.
Best of all, when you sign up for one of our company formation packages, we pay the £12 Companies House filing fee for you!
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- Set up a basic Limited Company that’s ready to trade and choose anything else you need as extra.
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What is a company formation agent?
Formation agents perform company registrations in partnership with Companies House. We’re one of the largest, and also the cheapest. We don’t just get your company registered then leave you to it – we use our experience to help you start your business properly. There are plenty of reasons to use a formation agent rather than go directly to Companies House. If you ask us, though, the best thing is that we go through the whole process with you, and get your application submitted securely online. We provide expert advice on the legal hurdles while you incorporate, and recommend good quality solutions that you might need after you’ve formed.
What’s the difference between sole trader and limited company?
Think of it this way: when you form a limited company, you put a protective shield between you and your business. Being a sole trader is the opposite – you have no protection. As a sole trader, you are responsible for any debt you might come into while you’re in business. When you register and become the director of your own limited company, you have less personal responsibility. The benefits are that you can claim back expenses, and add to your salary with dividend payments at the end of the year. For more information, see our Help Centre article about limited companies and sole traders.
How do I register a company?
Easy, we’ll do it for you. Check out our formation bundles to learn more about our different products. They start at £9.99, and go all the way up to our Super bundle. Limited company formation is a straightforward business if you’re as well-versed with the process as we are. If you’re not sure where to start, check out our company formation guides for an introduction and some insider tips.
Why The Formations Company?
We’re dedicated to British business, and love nothing more than seeing new companies flourish. 750,000 UK companies have trusted us to help them register, and we have thousands of happy customers who’ve seen how simple the formations process can be. We’re cheaper than going to Companies House directly, and cost less than most accountants. Our online application is incredibly simple, and if you’ve got all your documents handy it shouldn’t take more than 10 minutes to complete. So what are you waiting for? Start your business today.