What is a private limited company?

19th November 2024

A private limited company is the most common type of business structure in the UK but what exactly is a private limited company? Private- stands for a privately owned company. This can be an individual or a group of private investors. Limited- refers to the limited liability of the shareholders. Each share has a nominal value and can be multiplies by the number of shares held to work out the shareholders liability. At 99p we recommend issuing between 1-100 shares, as each share has a nominal value of £1.   A private limited company can be formed with as either limited by shares or a limited by guarantee. Here at 99p we only form companies limited by shares, as this is the most common structure for commercial entities. If you are looking to form a not-for- profit company a limited by guarantee company may be the best option for you. Each guarantor provided a guarantee to contribute a set amount towards any outstanding debts or liabilities the company may incur. For this structure we recommend using a service which specialise in this field.

Now we know what a private limited company is, what are the benefits of trading through one?

• Limited liability- your personal assets are protected unlike when trading as a sole trader
• Credibility- gives the impression of a corporate business
• Future proofing- allows you to put plans in place to keep your business going for generations
• Company name protection- all companies must have unique names to be registered at Companies House
• Tax efficient- when working with an accountant your company can take full advantage the tax savings available

We hope that this post has given you more insight into what a limited company is, so you feel more confident in starting your own. If you have any questions or need any assistance our formation advisers are always happy to help.