The term ‘limited company’ is most often associated with businesses registered in the United Kingdom. The registration of all companies in the United Kingdom is done through Companies House. Limited companies are registered in such a way to ensure its owners have limited liability, in other words, it is classed as a separate legal entity to its owner. This means that if anything was to go wrong with the company i.e. bankruptcy or any other financial stress, then it would only be the assets of that company that were affected, the owner would not be liable to pay and their personal assets would be protected.
This means that any money made by the company belongs to that company and not the owner. Therefore, if you set up a limited company and want to take an income from the money earned you must essentially employ yourself through the company and take a wage through payroll. The owners can also take money from the company profits by declaring dividends. This can be more tax efficient than taking a salary.
Limited companies are owned by shareholders and ran by directors, and there is no limit on how many of each there is in one company. In smaller companies however, it is often the case that the shareholder is also the director. Ownership of a limited company can also be easily transferred which is another reason why they are popular.
If you would like any further information on limited companies or would like some advice on setting one up or an existing company, then please do not hesitate to phone or email us, or alternatively, you can simply use the live chat link available.
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About The Author
MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.