Limited Company Formation

Taxfile > Limited Company Formation


Are you weighing the advantages and disadvantages of having a private limited company?


What do we mean by a limited company?

A limited company is an organisation that is set up to run your business. A business becomes ‘limited’ once the company name and its owner(s) have been registered with Companies House and when limited status is granted, it becomes a distinct entity from its owners.

There are two distinct types of Limited companies: limited by shares and limited by guarantee.

The former is when there are shares and shareholders and profits can be kept. Limited by guarantee has guarantors & invests profits back into the company. This is typically in not for profit companies.

A private limited company (LTD) is also different to a public limited company (PLC). A PLC must have a minimum share capital of £50,000, at least two shareholders, two directors, and a qualified company secretary. Therefore, most small to medium businesses will opt for a private limited company.

A LTD company structure creates a distinct border between the business owner and the business itself, and under the eye of law, the business becomes a separate legal entity in its own right, becoming responsible for its own actions and finances.  This in turn limits the liability of the owner from any risk the business may need to take.    So if you are a small business expanding & possibly needing employees & assets, then a limited company is a good idea.

Taxfile can help you set up a private limited company.

Starting a limited company is a relatively straightforward administrative task that starts out with choosing an available company name from Companies House to filling a filing a series of forms. At Taxfile we can ensure that all your forms are compiled correctly, providing ongoing support.

To set up your private limited company you will need at least one director and one shareholder.  As the business owner(s) then you would take a salary/wage from the business.  We can advise you how to best set up your salary and dividends to pay less tax.

If you would like help and advice about forming a private limited company please call us on 020 8761 8000.

We have helped many of our clients transition from being self-employed to having a limited company.

Very helpful and down to earth Accountants. Gave good advice when I was setting up my company and were available outside of normal business hours when I was pushed for time.

What are the main differences between being self-employed and running a limited company?

The major difference between running a private limited company and being self-employed are the administrative requirements you are required to do by law & although the volume is more, the data contained within those returns are pretty similar to being a sole trader.

A limited company will:

  • need to keep company records
  • report any changes to Companies House & HMRC
  • need to file an annual company tax return along with the company’s accounts, giving an undistorted view of its finances.

As a director of a private limited company you will:

  • make decisions that benefit the company rather than your own
  • abide by the rules and regulations outlined by the company articles of association, which are written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary
  • notify any shareholders if you might benefit personally from a company transaction
  • always act with the intention of making the company successful.

In forming a limited company you are limiting your personal liability but in doing so you can not abuse your power with the limited liability to take selfish and unnecessary risks.

At Taxfile we can help advise you on private limited company and take care of all these tasks to for your private limited company and avoid any complications down the line. Call us on 020 8761 8000.


Contact our advisors if you are weighing the advantages and disadvantages of registering a private limited company


Accounts Manager


Company Administrator


Limited Company Tax Agent

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