How To Start A Business (Series) - How to Setup a Limited Company in the UK?


Are you planning to set up a limited company? Do you want to know what is involved in setting one up and what costs are involved? If yes, then stay tuned as we will discuss the procedure of setting a limited company and everything it entails.


So, let's get started by discovering what a limited company is.


What Is A Limited Company?


A limited company is a company ‘limited by shares’ or ‘limited by guarantee’.


Limited by shares


Limited by shares companies are usually businesses that make a profit. This means the company:

  • is legally separate from the people who run it

  • has separate finances from your personal ones

  • has shares and shareholders

  • can keep any profits it makes after paying tax


Limited by guarantee


Limited by guarantee companies are usually ‘not for profit’. This means the company:

  • is legally separate from the people who run it

  • has separate finances from your personal ones

  • has guarantors and a ‘guaranteed amount’

  • invests profits it makes back into the company


In the UK, a limited company must be incorporated at Companies House. This confers the status of being a separate ‘legal person’ from the people who run it, with a unique company registration number.


Thereafter, it is governed by the requirements of the Companies Act (and the company's own articles of association). It must send regular "returns" of information to Companies House. That information about limited companies is held on the public register, which is available for anyone to see. Even if a limited company has only one person involved, who is the sole shareholder and lone director, it’s still a distinct legal entity, legally separate from that person.


This is different from a sole trader or