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Forming a limited company can sometimes be the most tax efficient business structure for its directors and shareholders. There are different types of company, including:

Most companies are limited by shares. This means that the value of shares they own limits a shareholder’s financial liability if things go wrong. As long as they haven’t broken any laws, company directors aren’t personally liable for company debt.

Running a company does require a bit more admin though, which can put some people off.

What’s different about public limited companies?

Choosing the right business structure for you largely depends on your circumstances. The two most common types of company are private or public limited companies, which do have different requirements.

For instance, a public limited company (also known as a PLC) must have a company secretary, as well as a minimum share capital of £50,000. Private companies don’t have a minimum value requirement.

A public company must also receive full payment (the premium, and a minimum of one quarter of the nominal share value) before allotting shares. Allotment of shares is the process for creating and issuing new shares in a company. They must also wait until receiving their registration certificate before they can begin trading.

It’s also worth noting that public companies are subject to more rigorous controls. This is to protect investors, because their shares are available for public sale.

 

accounting services for limited companies

What are the advantages of a public limited company?

The main advantage of forming a public limited company is the ability to list company shares on the Stock Exchange. This allows the company to raise capital by selling shares to the public. It also enables existing shareholders to buy and sell shares easily.

Dividends paid to shareholders of a public company are likely to be higher than those paid to shareholders in private firms, too. Public companies require larger share capital to start up, so tend to generate more profit, more quickly.

Are there disadvantages of forming a public limited company?

A PLC must have a company secretary with a professional qualification, such as a solicitor or an accountant. It’s often not an obstacle, but it’s certainly something worth considering when starting out. Private companies don’t need to have a company secretary, though they can if they wish.

A public company also has less time to submit accounts to its members after the end of an accounting period than a private company does.

Talk to one of the team by calling 020 3355 4047, or get an instant quote online for accountancy services.

About The Author

Beth-Anne Bruce

I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.

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Geoff casement
Geoff casement
26th January 2013 1:43 am

Hi Helen,
I have read your article about forming a plc company !
I am interested in starting a property holding company !
I would be very grateful for your help !!
If i register as a plc company what would be the best stock market “model” to register in ??
AIM, OTC etc ??? “this is a grey area for me”
I have been renting property for a number of years and i am suffering as a result of the property crash “sole trading”
However it is clear that property has become very attractive again !
Kind regards Geoff.

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