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What is a Public Limited Company (PLC)?

For some businesses, setting up as a public limited company or PLC can make sense – but what is it and what are the advantages of a public limited company?

What d oes PLC mean?

In many ways, a public limited company is similar to a private limited company. You’ll still be required to register with Companies House and your personal liability is limited. The main characteristic and advantage of a public limited company is that you can raise capital through external investors, in essence, offering shares in your company to the public. To set up as a PLC you need to have at least two shareholders and at least £50,000 worth of shares must be issued, although there’s no obligation for you to offer any further shares to the public.

If you’re not in the required financial position just yet a private limited company can be re-registered as a PLC further down the line – and vice versa – by applying and passing a special resolution with Companies House.

There’s much to gain by being a limited company and, while there is a bit of paperwork to get you set up, using a formations agent can make it quicker, easier and less costly than you think.

Advantages of public limited companies

One of the advantages of a public limited company is that, as with a private limited company, a PLC is set up as a separate legal entity, which means that you won’t be financially or legally liable for losses made by the business. Other advantages of a public limited company include:

  • Wider financial input

As a PLC you can offer your shares for sale to the public, bringing a much greater choice of investment with it.

  • Greater credibility

Many people see a PLC as a more established company. This means your company may seem more prestigious as a result.

  • Shared responsibility

As well as limiting your personal liability you’ll also be able to share some of the load. This means you’ll be getting help from shareholders with ideas, decisions and action.

  • Skills and expertise

Bringing a greater range of people into your business mix means you’ll also be able to benefit from their experience, their skills and their expertise.

  • Tax advantages

With the company paying Corporation Tax on taxable profits you may be protected from higher income tax rates. There are also more tax-deductible costs and allowances on hand for limited companies too.

Disadvantages of public limited companies

Setting up as a PLC means there’s more paperwork to consider. You’ll also immediately be a lot more visible to the public. You can reduce much of the hassle of set up by using a formations agent. This means the process laid out and everything taken care of for you. Other considerations include:

  • Set up costs

Registering with Companies House you’ll need to pay a fee. Using a formations agent to register a limited company you’ll probably find this is cheaper than going direct.

  • Company accounts

Your financial information will be public and is, therefore, more complex. Speak to one of our advisors about our accountancy recommendation scheme. You’ll find our phone number at the top of every page on our website. This can help you to keep a better eye on the progress of your company. Also, getting help to make sure your accounts fit the bill needn’t be as expensive as you’d think.

Setting up a public limited company

As you can see, there are many advantages of public limited companies, However, there’s also an increase in compliance, complexity and public scrutiny. To set up a PLC, you need to register with Companies House, either online or by post. Find out more about how a formations agent can help set up a limited company.

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