A limited company is the second most popular form of actively trading business structure in the UK. According to the Federation of Small Businesses (FSB), there are some 2 million actively trading limited companies, compared to around 3.5 million active sole traders.
In total, there are over 4 million limited companies registered with Companies House.
Limited companies are incorporated businesses that are limited by shares or guarantee. To break this down:
The vast majority of limited companies are private companies limited by shares. This is a non-public company whose ownership is structured through shares (even if this is just a single share owned by a sole director-shareholder). This type of company can retain profits after tax and distribute these to shareholders (e.g. via dividend payments). Other types of limited companies include:
Limited Liability Partnerships (LLPs) are similar to limited companies, but are generally considered distinct. Although LLPs are also incorporated businesses – both with their own legal personality and limited liability (although they do not have shares) – their structure is more akin to that of traditional partnerships.
Aside from the core benefits of having their own legal personality and protecting their members from personal liability for debts incurred by the business, limited companies also have some other advantages:
There is generally more administrative work involved with setting up and running a limited company as opposed to starting out as a sole trader, but our team can help set up a limited company along with a Stripe account and many more. Choose one of our packages that best suits your need.
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