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Private Companies
Private Companies
Two main types of private companies exist in the UK, each with its own set of rules and obligations. They are either limited by shares (paid or unpaid) or have share capital or no share capital.
Both types of limited companies trade with the intention of making a profit.
- Limited Company (Ltd)
- Unlimited Company
Private Limited Company (Ltd)
Due to the limited liability, potential tax advantages such as tax free dividends and simplicity of operating as a limited company this is one of the most popular business structures in the UK.
Limited Companies appear on Companies House Register, accounts, filing history, directorships and person/s with significant control can be freely viewed, this affords transparency and can be a significant advantage when doing business.
A Limited Company is seen as legally separate in the eyes of the law from the people who run it. The with the liability limited to the value of any paid/unpaid shares owned.
The shareholders personal finances are separate from the business finances and any profits can be kept after taxation.
Private Ltd Company Obligations
- Minimum requirement of at least one director or shareholder
- A Memorandum of Association and an Article of Association is formed and registered (these documents confirm that a company is to be formed and how it will be run)
- Register with Companies House for incorporation
- File Annual Accounts, Annual Return and Confirmation Statement with Companies House
- Finance can be raised either through loans or retained profit
- Records of all income and expenses must be recorded
- Submit a Company Tax Return CT600 each year with HMRC
- Corporation Tax paid on company profits and capital gains tax on asset sales over a certain value
- Each director must register for self-assessment with HMRC, and submit an annual tax return
- Limited Liability (Limited to value of paid or unpaid shares)
- Comply with HMRC regulations for PAYE, Pensions and VAT
Private Unlimited Company
Private Unlimited companies are not as common as limited companies there are some 4,600 registered with Companies House, they are run in the same way as their private counterparts, the two distinct differences lie with the filing of accounts and the liability:
Key differences between Limited and Unlimited
- Exempt from Filing Annual Accounts with Companies House (unless associated with a limited company)
- Unlimited Liability (partners equally liable for all the debts and losses of the business)
Private Unlimited Companies can be advantageous, and although at liquidation the shareholders personal assets are normally used to pay creditors, this can lead to owners being more responsible and less likely to take risks that may jeopardise the company, this instils greater confidence in creditors.
Privacy is a afforded in the exemption of publishing financial statements which can provide a competitive advantage over its counterpart the Limited Company.
· Key Documents
Memorandum of Association Private Co with Share Capital
Model Article of Association Private Co Ltd by Shares after April 2013
