A limited company is an organisation that someone can set up to run their business, it’s responsible in its own right for everything it does and its finances are separate to the owners’ personal finances. Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits. Every limited company has ‘members’ the people or organisations who own shares in the company. Directors are responsible for running the company. Most limited companies are ‘limited by shares’. This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for. Company directors aren’t personally responsible for debts the business can’t pay if it goes wrong, as long as they haven’t broken the law.
There are two types of companies, Private Limited ones and Public Limited ones. In Private Limited companies directors or shareholders financially back the organisation up to a specific amount if things go wrong while in Public Limited companies, the company’s shares are traded publicly on a market.
