What is a Limited Company?
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A Limited Company is one of the most common business structures in the UK — but what does it actually mean in practice?
At its core, a Limited Company is a separate legal entity from its owners. This means the business has its own identity, distinct from the individuals who run it.
Key Features
- Limited liability
The biggest advantage — shareholders are only liable for what they invest. Personal assets are typically protected if the business runs into difficulty. - Separate legal identity
The company can:
- Enter into contracts
- Own assets
- Take on liabilities
All in its own name, not yours.
- Ownership & control
- Shareholders own the company
- Directors manage the day-to-day running
What are the compliance requirements?
Running a Limited Company brings added responsibility compared to being a sole trader.
Accounting obligations
- Prepare annual statutory accounts (usually under FRS 102/1A or FRS 105)
- File accounts with Companies House
- Maintain accurate financial records
Tax obligations
- Pay Corporation Tax on the company’s profits
- File annual Corporation Tax returns with HMRC
- Operate PAYE if paying salaries
- Submit VAT returns if registered
Company administration
- File a Confirmation Statement annually
- Keep statutory registers up to date
- Report key changes to Companies House – directors, shareholders, registered office
Is a Limited Company right for you?
While the structure offers protection and potential tax planning opportunities, it does come with more administration and transparency.
The right choice depends on:
- Your level of profit
- Growth plans
- Long-term exit strategy
