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Types of Limited Company

A limited company is one of the most popular types of business structure; this is because a limited company provides a limited about of financial liability for shareholders and owners. The financial liability of the shareholder or the owner is limited to the value of their shares or, for a company that is limited by guarantee, their guarantees. This means that the company owners are not liable for any business debt beyond the values of their shares or guarantees.

There are many types of limited companies that you can form in the UK. These types of company are known as:

Private Limited by Shares (LTD)
A private company limited by shares is the most popular type of company formed in the UK. This type of company is owned by shareholders and managed by directors. These profits can then be reinvested in the company or distributed among the owners in the form of dividends. The shareholders’ liability is limited to the value of the shares they hold in the company, which is what makes this type of company so popular. In common with most other limited companies you will probably also want to register for PAYE so you can pay yourself a regular wage through PAYE and make the most of your tax allowances
Private Limited by Guarantee (LBG)
This company structure is most commonly used by charities and non-profit or community organisations. Companies limited by guarantee are managed by directors and owned by guarantors rather than shareholders. The guarantors commit to paying a certain amount of money toward company debts if the business ever experiences financial difficulty.
Limited Liability Partnership (LLP)
A limited liability partnership is a relatively new type of business structure that combines the limited liability of a company with the flexibility and tax arrangements for a traditional limited partnership. In a limited liability partnership there are no directors, shareholders or guarantors but there must be a minimum of two members, or partners.
Public Limited Company (PLC)
Public Limited Companies are limited by shares, very similarly to private limited companies limited by shares. However, the main difference between the two is that the shares from a PLC are made available for purchase by the public. The involvement with the public means that there are stricter regulations placed on Public Limited Companies.
Private Unlimited Company
In a private limited company there is no restriction on the financial liability of the business owners. The owners may not have to disclose as much information as the owners of a company that is limited by shares but they will also be considered financially responsible should the business incur any costs.

What are the advantages of starting a Private Company Limited by Shares?

The Company Warehouse will always recommend that you choose for your business to be a private company limited by shares as it is quick and easy to form and comes with a range of advantages for the owner and shareholders.

There will be limited financial liability meaning that the owners and shareholders are not personally liable for the company’s debts.

As a shareholder or director of a limited company, you can pay yourself through a mix of methods which will allow you to reduce your personal tax liability.

Lots of larger companies will only deal with other limited companies because it reduces their business risks. You will gain much more credibility with other companies if you are officially registered with Companies House.

Setting up your business as a company that is limited by shares will give you greater control and confirm your ownership over the company. You will be able to put a formal legal structure in place that determines who owns what and who makes the business decisions.