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A Guide to Company Types: Which is Right For Me?
@UKplc Company Registrations aims to make it easy for you to decide what type of company you need to form so you can focus on growing your business
In the UK, there are a number of different types of company and the type that will be best for you depends on your requirements. The industry of business you wish to start, whether you want to begin alone or with a partner and what you will do with any profit all makes a difference in determining what will be the best fit for you.
Private Limited Company
A private limited company is a separate legal entity with limited liability. Limited liability means your personal assets are protected in the event of any issues with the company. The limited status provides credibility and confidence to suppliers and customers as company details are available for all to see on the Companies House database. Once incorporated, your company name will be protected and this prevents anyone else from trading under this name. As a separate legal entity, the company can continue to trade irrespectively of whether the directors or shareholders change.
Public Limited Company
A public limited company allows you to sell your company’s shares to the public. It has a memorandum that states it is a public company and has an issued share capital of a minimum £50,000. The mandatory use of PLC after the company name instantly informs investors or anyone else dealing with the company that it is public.
Limited Liability Partnership (LLP)
If you are wanting to start your business with a partner, it is likely that a limited liability partnership is good option for your company. Members of an LLP are able to limit their personal liability, but they are taxed differently in that any profit is treated as the personal income of the members. LLPs are available to two or more persons associated for carrying on a lawful business with a view to profit by incorporation with the Register of Companies.
Limited By Guarantee – Not For Profit
A company limited by guarantee does not have a share capital or shareholders and has members who act as guarantors instead. This tends to be more appropriate for not for profit organisations than a company that is limited by shares. A not for profit is defined as an organisation that does not distribute its earnings to members and instead must use them for defined objectives or aims. For example, associations, societies and clubs.
Limited By Guarantee – Charity
Like not for profit organisations, the limited by guarantee status is also appropriate for charitable organisations. A charity must dedicate its surplus to charitable causes. You can learn more about setting up a charity here.
We hope you found this guide to different company types in the UK useful. If you are ready to start your company now, please check our comprehensive range of company formation packages.