Understanding Limited Company Incorporations

When forming a new company, one of the first things to do is choosing the structure of a company before incorporating it. Very often people prefer to go for limited companies and limited company incorporation is becoming very popular.

There are two types of Ltd companies incorporations – Private Limited Companies and Public Limited Companies. You could go for either of these limited companies incorporations. Private limited companies require registration with the Registrar of Companies at Companies House. A limited company is seen as a separate legal entity according to local laws. In such a company business structure the shareholders enjoy limited liability. This simply means that their personal assets are considered separate from the personnel assets of the company. So in the event of the company not being able to pay off its debt, the personnel assets of the shareholders cannot be touched. The shareholders therefore enjoy this protection and they can only lose what they have put into their business.

Limited company incorporation requires submission of a registration application to the Companies House, which will accept and incorporate the company. After this the Companies House will issue a certificate of incorporation and a company registration number indicating that your company is formed and governed as per UK laws and regulations.

The management of a private limited company is in the hands of the board of directors. Each and every director is personally responsible for the management of the company. They should also act in the limited company's best interests.

Through the PAYE tax system the directors are employed by the company. The limited company is a legal entity in its own right. It can be sold, and it can also buy shares of other companies. It has 'perpetual existence'. The capital can be raised by selling shares, but not to the general public. The shareholders will receive the dividends as profits.

A Ltd company incorporation that is public in nature is very similar in functioning. The important difference between a public and private company is that a public company can offer to sell its shares to the public.

Before a public limited company commences business or borrows money, the company must satisfy Companies House by showing that a minimum shares worth £50,000 have been issued; also, each and every share should have been paid up to one fourth of its value. This being done, the company is allowed by the house to start business.

Limited companies are one of the sought after business structures due to the benefits. They offer protection from personal liabilities, tax advantages, availability of finance and several other aspects. However, though they have their benefits the structure can still be complex and therefore it makes good sense to opt for a limited company incorporation agent for the incorporation.

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