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What is a limited company?

Limited companies are an entity of their own, meaning a distinction needs to be drawn between the company’s finances and those of the owner.

Shareowners may be individual people or other companies. They are not liable for the business’s debts unless they have provided guaranties, such a bank loan. Nonetheless, they may lose the money they have put into the business if it fails.

The three types of limited company

The three primary sorts of Ltd companies are explained below:

Private limited companies are made up of one or more members or shareowners. They cannot offer up stocks to the public. Virtually all small companies are private limited companies.

Public limited companies, called PLCs, must have at least a couple of stockholders and must have issued shares to the public to an economic value of at least 50,000 in advance of when theycan trade.

The third kind, private unlimited companies, are uncommon and are usually created for limited reasons.

Setting up a limited company

Setting up an limited company is comparatively uncomplicated. Firstly, you must register at Companies House. You must name your directors – one for a private limited company and at least two for a PLC.

Those directors may also be shareowners. They have to be aged 16 or older, and one of them must be a private person as opposed to a company. PLCs must have a qualified company secretary whose details have to be recorded at Companies House. Directors are answerable for notifying Companies House for any alterations to the company’s directors or company secretary.

Limited companies can raise money via their shareowners, business loans or their gains. PLCs, meanwhile, can raise cash by trading their stock on the stock market. Earnings are shared with shareowners as a dividend, although a lot of that net income is kept within the business to give it working capital.

Limited companies’ accounts responsibilities

All limited companies are required to file accounts with Companies House. Their accounts have to be inspected on an annual basis, although some businesses are exempt from this requisite. It is essential that the directions Companies House provide you with for lodging your accounts are followed to the letter.

If the business makes a profit or has any taxable income, it needs to notify HM Revenue and Customs (HMRC) of that profit, pay corporation tax and file a tax return annually. Having a competent accountant is indispensable for an limited company to make sure that it meets all responsibilities.

Posted by Mark
November 27, 2015

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