Private Limited Company (Ltd)

Private Limited Company (Ltd)

A private limited company is owned by shareholders. It has limited liability and therefore shareholders can only lose what they have invested in the business. Their personal assets will be separate from the business and protected. Shares in a private limited company are not available to the general public.

How to set up a limited company?

• A private limited company is set up through the Companies House. It can be set up through the use of an accountant or by yourself.
• Once the company has been created you will be provided with a date of incorporation and a company number.
• Companies House will also provide a Memorandum of Association which describes what the company has been created to do.
• Companies House will also provide an Articles of Association which cover the internal rules regarding what directors can do and the voting rights of shareholders.

Advantages of limited liability

1. Limited liability – protects owners personal assets and wealth
2. Easier to raise capital 
3. More privacy over a public limited company

Disadvantages of limited liability

1. Greater admin and accounting costs
2. Have to publish shareholders and business accounts
3. Company information available online 
4. Directors have legal duties