UK Limited Liability Companies

The Importance of a Limited Liability Company Formation

With EU membership and international business, ways of doing business in the UK have become more diverse. For example, your Limited Liability Company may not only supply the local market; your Limited Liability Company may be supplying its goods or services to other EU countries, or acting as an agent that imports goods into the UK. Online sales are also a major part of trade and you may register a Limited Liability Company to start an ecommerce business.

For your potential customer, Limited Liability incorporation is a sign of planning.

In the UK there are four types of limited companies. These are:

  1. Private Limited Company (limited by shares)
  2. Private Limited Company (limited by guarantee)
  3. Private Unlimited Company
  4. Public Limited Company
Private Company limited by shares
  • Only 1 member needed for limited liability company incorporation
  • liability limited to amount on unpaid shares (if any)
  • Issues shares
  • Legally distinct/separate from members
  • Managed by Board of Directors
Private Company limited by guarantee

  • Only 1 member needed for limited liability company incorporation
  • Members serve as guarantors and contribute to the company’s assets in the event of winding-up
  • Legally distinct/separate from owners/members
  • Does not issue shares
Private Unlimited Company

  • Liability of members is unlimited
Public Limited Company

  • Authorised to sell shares to general public
  • May be listed on stock exchange after limited liability company formation
  • Liability limited to value of unpaid shares of each member
  • May or may not have share capital for limited liability company registration
General Partnership

  • Requires 2 partners to be registered
  • Debts are the personal responsibility of partners, unlike ltd. company
Limited Liability Partnership

  • Limited liability partnerships and a ltd. company can be a partner
  • Rights and responsibilities depend on type of partner
Sole Trader (Sole Proprietorship)

  • Owner has unlimited liability, unlike a Ltd. company Least government regulated
  • Does not undergo formation procedures unlike a Ltd. company
  • Not legally distinct/separate from owner
  • Profits taxed as income

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