Ask our limited company accountants
What is a limited company?
It's an organisation that you create to run your everyday business operations. It’s also the legal mechanism that separates your personal finances from your company finances. The company owns any profit you make, as long as you settle your Corporation Tax first. After that, the company can then share its profits with its shareholders and yourself.
Who owns a limited company?
Behind the scenes are the people who physically own shares in the company - the shareholder(s). That means that they own a portion of the company, redeemable through the profits it makes. As the company director, you’re responsible for running the company and can own shares yourself. Please note that as a director and/or shareholder, you will be required to register for self-assessment and therefore tax in your personal capacity too.
As the director of a limited company, you’re not personally responsible for business debts, but it still pays to familiarise yourself with your legal responsibilities. Find out more in our guidance document about director’s responsibilities.
The benefits of trading through a limited company
The great thing about a limited company is that it’s considered a separate legal entity, which is subject to different tax treatment. For contractors, this is a huge benefit.
With limited companies, you need to understand the following:
- The paperwork required to start your limited company
- The types of tax you will be subject to
- The money you can put into your own pocket if your business makes a profit
- The personal responsibilities you take on if your business makes a loss