What is a Limited Company?

Having decided that you want to start a business you may be considering the registration of a limited company. But what is a company and how is this different to being a sole trader?







A UK company is a legal entity which is registered and monitored by Companies House. It is a legal entity in its own right and treated as an individual separate from the directors and shareholders appointed and therefore has legal responsibilities. 

A company is a legal entity

Legally a UK registered company is deemed to be separate legal entity from the company officers. Therefore the company can perform a number of the same processes a physical person can.

For example the company can enter into contracts, it can buy or sell goods, the company can own property and be sued in the same way a physical person can.

As a company is treated as a physical entity it can also open its own bank account in the business name, obtain credit cards and apply for business loans.

company legal entity


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ONLINE COMPANY FORMATION. You can start a new limited company today. Using our online company registration service you can begin trading as a limited company within just a few hours. 

HELP AND ADVICE. When registering a company you can benefit from our support before during and after the company formation. Our team are ready to answer your questions.

A company may take different forms

A UK company can take different forms such as a public limited company (PLC), a company limited by guarantee (often called not for profit) or a company limited by Shares. The most common types of company formed in the UK are limited by shares and limited by guarantee.

The limited liability of the members is set by the value of the shares or the guarantee value in the case of a company limited by guarantee and protects the shareholders or members of the company and their possessions as long as they have not broken the law. The value paid for shares or amount set as the guarantee value and detailed in the articles of association is the total amount the Members are required to pay towards the company debts if it is wound up and dissolved.

company structures

It is this protection of liability that makes a limited company a popular choice of business entity for many business owners. If you are not sure whether to operate as a limited company, LLP or sole trader we recommend you seek advice from an accountant.

What is the basic information required?

To register a new UK limited company you need the following-

COMPANY NAME - A unique company name that is not already on the register

UK ADDRESS - A UK address to provide as the official registered address

DIRECTOR - One person (or more) to be appointed as a company director

SHAREHOLDER - One shareholder (or more) to own the shares in the company

SECRETARY (OPTIONAL) - Company secretaries are no longer required but some companies do still appoint one

In reality many companies are formed by one person who is the director and shareholder. UK company formation is really quite simple if you have the right website to help you.


Looking to start a limited company today?

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Please note Companies House processing times are an estimate only and not guaranteed.

Simple Formations is a trading name of Small Firms Services Limited. We have been trading since 1998 and are one of the UK's longest standing Company Formation Agents

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