You may be a sole trader, a freelancer or you may not have stepped foot in business before. Perhaps you wish to have, or require, limited financial liability, reduced tax bills or protection from risk. No matter what your situation is there are options. Here are the different types of limited companies for you to consider.
The most common legal structure you can choose is a private company limited by shares. This is suitable for most commercial enterprises, although you may wish to speak to an accountant for further information about other options.
Private Company – limited by shares (LTD)
This sets the company up as a separate legal entity which is owned by shareholders. If the business runs into trouble the amount that shareholders are liable for is limited to the value of any investment they have made in the shares of the company.
Any profits made belong to the company and can either be reinvested in the company or passed onto the shareholders using dividend payments. The company cannot sell shares to the general public.
Private Company – limited by guarantee (LTD)
Companies limited by guarantee are often social enterprises, charities or other not-for-profit organisations, such as sports clubs or political parties that do not have owners.
All profits are reinvested back into either the organisation itself or its objectives. Members of the company do not purchase any shares in this type of company.
Note: We do not currently form Limited by Guarantee Companies.
Public Limited Company (PLC)
This type of company is similar to that of a private company limited by shares, the main difference is that its shares can be sold to the public. As a result there are a number of additional legal requirements that must be met.
Note: We do not currently form PLCs.
Private Unlimited Company
This type of company can have share capital, but may choose not to. There is no limit to the members’ liability. Private Unlimited Companies disclose less information than other types of companies because the members’ liability is unlimited.
Note: We do not currently form Private Unlimited Companies.