If you are thinking about starting a business in the United Kingdom (UK), one of the organisational structures that you may look into is a private limited company. This is because a private limited company is one of the most common types of businesses in the UK (PLC). The operation of your company as a PLC comes with a number of benefits, some of which include the limitation of liability for shareholders, enhanced stability and flexibility, and favourable tax treatment. On the other hand, there are a few potential disadvantages that ought to be taken into mind, such as the necessity of meeting additional requirements in order to conform to rules.
In this lesson, we will walk you through everything you need to know about forming a private limited company in the United Kingdom, from the responsibilities of directors to the process of establishing a PLC and everything in between.
What does it imply exactly when people talk about a "private limited company"?
A private limited corporation is one of the various types of legal entities that may be found in the United Kingdom. A corporation is held by its shareholders, and those owners individually have limited accountability for the firm's debts and liabilities. This particular corporation is owned by its shareholders. This suggests that the only assets that the shareholders stand a chance of losing in the event that the company encounters financial difficulties are the monies that they have personally invested in the company.
It is not possible to sell shares in a private limited business to the general public, and these shares are often owned entirely by a select group of shareholders. However, it is possible to sell shares in a public limited company. In contrast, a firm that has been listed on a stock market and makes its shares accessible for purchase by the general public is referred to as being "publicly traded."
A private limited company needs to have at least one shareholder and one director in order to be able to carry out its business activities legally. The directors of a company are elected by the shareholders of that firm, and it is their duty to administer the company in the shareholders' best interests.
The Numerous Benefits That Come Along With Employing a PLC Structure
Choosing to structure your business as a limited liability corporation offers a lot of benefits, including the following, which are just a few of them:
shareholders have a relatively low level of legal responsibility: As was said earlier, the most significant benefit of forming a PLC is that it shields the investors from the majority of legal responsibility in the event of a lawsuit. This suggests that the only thing they stand to lose is the money that they've put into the company, and none of their other assets that are not related to the business would be affected in any way.
More consistency while retaining some degree of adaptability: When contrasted with other types of business structures, such as sole proprietorships or partnerships, private limited companies are known to be more stable. This is because they exist as a separate legal entity from their owners, which gives them their autonomous status. Because of this, private limited corporations have additional flexibility when it comes to the process of generating cash, as they are now able to do so through the selling of shares. Previously, they were limited in their ability to generate capital in this manner.
Limited liability companies (LLCs) and private limited partnerships (LLPs) are also eligible for some tax benefits. For instance, they are allowed to claim corporation tax relief on certain expenses, which helps offset some of the costs associated with operating their business.
