Are you looking to set up a Limited company? A limited company is a company ‘limited by shares’ or ‘limited by guarantee’. Read on to learn more.
Limited by Shares
Limited by shared companies tend to make a profit. Ultimately the company is usually legally separate from the people that run it and can keep any profits it makes after paying tax. Separate finances are common, for example, your business and personal finances are not mutually exclusive. Companies limited by shares often have shareholders. Shareholders are subject to capital gains (or losses) and/or dividend payments as residual claimants on a firm’s profits.
Limited by Guarantee
Companies limited by guarantee are usually ‘not for profit’ and this means that the company invests profits it makes back into the company. Different from a limited by shares company, those limited by guarantees have guarantors and a ‘guaranteed amount’. Guarantors promise an agreed amount of money to the company if it cannot pay its debts. This is the ‘guaranteed amount’. They must pay the company the full amount of their guarantee. This payment covers guarantors for situations such as the company being closed down. Like a limited by shares company, the business has separate finances from your personal ones and is legally separate from the people who run it.
To Do List
Before setting up a Limited company, there are things to consider;
- Check if setting up a Limited company is right for you (there is lots of helpful information on GOV UK)
- Choose a name
- Choose directors and a company secretary
- Decide who the shareholders and guarantors are
- Identify people with significant control (PSC) over your company
- Prepare documents agreeing how to run your company
- Check what records you’ll need to keep
- Register your company
If we can help or advise you at all, please do get in touch!