What is a Limited liability Company Formation?
There are essentially three legal or accounting structures recognised for starting a business. You can go it alone by being a sole trader, team up to form a partnership or operate a limited company. Choosing the right one is important.
Types of limited company formation:
Private company formation limited by shares - this type of company has a share capital and the liability of each member is limited to the amount unpaid on shares that a member holds. A private company cannot offer its shares for sale to the general public. You can set up this type of company using our Online company formation service.
Private company formation limited by guarantee - in this type of company, members do not make any contribution to the capital during its lifetime as they do not purchase shares. The members' liability is limited to the amount that they each agree to contribute to the company's assets if it is wound up. You can set up this type of company using our Online company formation service.
Public limited company formation - this type of company has a share capital and, the liability of each member is limited to the amount unpaid on shares that a member holds. A public limited company may offer its shares for sale to the general public and may also be quoted on the stock exchange.
Private unlimited company formation - this type of company may or may not have a share capital and there is no limit to the members' liability. Because there is no limitation on members' liability, the company has to disclose less information than other types of company.
The term limited refers to limited liability and there are around 1.5 million in the UK. If you're a sole trader or partner, you can be held personally liable for it – outstanding debts can be met from your personal assets.
A limited company, however, is a separate legal entity and can own property, incur debts, sue and be sued. Any business dealings are made on behalf of the company, rather than you. Its owners are liable only for the amount invested.
We also can Incorporate:
Limited Liability Partnerships
A Limited Liability Partnership (LLP) shares many of the features of a normal partnership - but it also offers reduced personal responsibility for business debts.
Unlike members of ordinary partnerships, the LLP itself is responsible for any debts that it runs up, not the individual partners.
What are the advantages of a company formation?
One of the primary advantages of a company formation is the limited liability the corporate entity affords its shareholders. Typically, shareholders and directors are not liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder or director to pay debts of the corporation. In a partnership or sole proprietorship the owner's personal assets may be used to pay debts of the business. Maintaining the limited liability of a corporation requires that the shareholders and directors follow all the rules of governance, including holding annual meetings and maintaining meeting minutes, which is why we offer corporate advice as part of our complete incorporation package.
Company Formation - How do you set it up?
If you want to trade as a private limited company there are four things you need; a new company name, a UK address, an officer and shareholder for the company, then completing our Online Company Formation Service. The registered office is somewhere to keep official documentation, and to receive official correspondence.
Memorandum of Association:
Part of the company formation process involves stating the nature of your new company formation. This is done in a Memorandum and Articles of Association. The Memorandum describes what your company is and does.
Company formation name: There are restrictions on some sensitive words and in some cases extra information will have to be provided. It must finish with the word limited but not have it elsewhere. Also, it must not be offensive or imply criminal activity and cannot have been registered by anyone else.
Registered office: This is the domicile where your company formations registered office is located.
Objects of the company formation: Here is where you describe what your company does. You must limit your business activities accordingly, so make it a wide statement, such as “general commercial trading company”.
Company formation Officers: You must have at least one director to make sure all the rules are followed and official records maintained.
Limiting the liability of the member shareholders: This means each owner of the company has to contribute no more than the value of their shares.
Company Formation Share capital: You must state the amount of capital in the company formation and how it is divided.