When setting up a limited company in the UK, there are several different types to consider, each with unique characteristics and suitability for various business needs. Determining the right structure for your company depends on various factors, and seeking the guidance of accountants in Solihull can help you make an informed decision.

Private limited company – limited by shares (Ltd.)

This is the most common type of limited company in the UK. It is characterized by its private nature, which means that shares are not available for purchase by the general public. Shareholders’ liability is limited to the percentage of their investment in the company. For example, a shareholder with a 10% stake is responsible for 10% of the business. Setting up a private limited company is a straightforward process that can be completed online.

Private limited company – limited by guarantee (LBG)

This type of company is often used for non-profit organizations or charities. In an LBG, there are no shareholders; instead, a board of guarantors is responsible for any debts incurred by the company. These guarantors agree to pay a specified amount to cover debts when necessary.

Public limited company (PLC)

A PLC shares some similarities with a private limited company limited by shares, but the key difference lies in its ability to offer shares to the public. This structure comes with additional legal obligations, such as the requirement for two directors, two shareholders, a company secretary, and a minimum of £50,000 in issued share capital.

If you are local to Solihull and would like free advice about the structure of your business or potential business, please call one of our offices for expert guidance.

Limited liability partnership (LLP)

An LLP operates similarly to a limited liability company limited by shares, but instead of shareholders, it has partners. Each partner is responsible for an equal share of the business, including any debts. For example, in a business with five partners, each partner would be responsible for 20% of the business and its liabilities. This structure is ideal for partners who wish to have an equal say in the management and involvement of the business, which differs from companies with shareholders who elect a board of directors to make decisions.

Private unlimited company

A private unlimited company is not required to submit financial statements or annual returns in the same way as other limited companies, allowing it to maintain a higher level of privacy. In this structure, shareholders do not have limited liability for their percentage of investment in the business. Instead, all shareholders are equally responsible for the company’s liabilities. In the event of any financial difficulties, the burden is shared equally among the shareholders. Private unlimited companies are less common than other types of limited companies.

If you are considering establishing a limited company, Tax Accountants in Solihull are readily available to provide the necessary assistance and guidance throughout the process. Our experienced professionals can help you navigate the complexities of company formation and ensure that you choose the most appropriate structure for your business needs.