-
By juan
- In Uncategorized
Ltd Company, Everything You Need To Know
The Ltd company is a suitable option for businesses of different sizes, it is quick to set up and offers attractive tax benefits
In addition, it limits the risk to its owners, the initial costs are low and the set-up procedures are quick.
For this reason, it is one of the most common legal forms adopted when setting up a company in the UK.
Below we outline the main characteristics of a Ltd company.
Contents
- Main types of Ltd company
- Main features of the Ltd company
- Conclusion
1 Main Types of Ltd Company
Private Limited Company (Ltd)
The Private Limited Company (Ltd) is the ideal option for any entrepreneur and owner of a medium-sized business.
In this type of company, shares are divided among the shareholders according to their investment and are private. This means that they cannot be sold to the general public.
Public Limited Company (PLC)
The Public Limited Company (PLC) is the type of organisation adopted by companies listed on the stock exchange.
Its shares can be traded on the financial markets and it is suitable for large companies.
Company Limited by Guarantee (CLG)
On the other hand, the Company Limited by Guarantee (CLG) is the legal form used by non-profit organisations.
Instead of shareholders, it has members. These members contribute a fixed amount called a guarantee with which the organisation ensures payment to its creditors in the event of liquidation.
2 Main Features Of The Ltd Company
In this section we detail, above all, the features of the Private Limited Company as being the most recommendable for entrepreneurs and owner of a medium-sized business.
Legal Personality
An Ltd company is a legal entity independent of its owners or shareholders. In other words, it involves the birth of a new person with legal capacity.
This means that the company has rights and obligations, and can therefore sign contracts, own assets, obtain loans and hire employees.
Limited Liability
The limited liability of an Ltd company stems from its status as an autonomous entity described in the previous point.
Indeed, since the company is an independent entity formed by the capital contributions made by the shareholders, each individual’s liability is limited to the amount they have contributed.
Thus, by setting up a company in this legal form, the owners safeguard their personal assets. This is because their risk is limited to the part in which they have participated.
Share capital requirements
The requirement varies depending on the type. For example, a Private Limited Company can be established from as little as £1, while £50,000 is needed to set up a Public Limited Company.
Costs of setting up an Ltd company
Setting up an Ltd company in the UK costs just £10.
This is because the United Kingdom is committed to making processes easier for entrepreneurs. Besides, it is a task that you can do online.
Flexible structure
The Ltd company can be owned by one or more people, which facilitates the administration and expansion of the business.
Furthermore, the shares can be sold or transferred, so that a particular owner can easily disassociate themselves from the company.
Accounting and tax obligations of an Ltd company
The main accounting and tax obligations of an Ltd company are the presentation of annual accounts and tax returns to HM Revenue & Customs (HMRC). And, of course, the payment of Corporation Tax.
It should be noted that these obligations are greater for a Limited Company than for a Sole Trader.
This is due to both the volume of activity and the guarantee of transparency in management for the partners.
Indeed, the company belongs to all the shareholders, but it is run by one or more directors.
The obligation to keep these accounting records is intended to guarantee transparency in management. Other reason is to ensure that the owners have all the information about the situation of the company.
Greater Credibility
Owing to the control requirements described in the previous section, Ltd companies enjoy greater trust and prestige than a Sole Trader.
3 Conclusion
In general terms, there are two most common legal forms for setting up a company in the UK. These are the Sole Trader and the Ltd Company, the latter offers more protection to the entrepreneur.
Finally, we would like to recommend that you consult with business advisory professionals for more tailored guidance.